3 Ways to Find Margin Call Price

Investors often purchase stock on margin. Margin is a type of loan system in which you put up only a percentage of the price of the stock. As long as your stock performs well, you don't have to worry about your margin. However, if your stock falls below a certain percentage of its original price, called the maintenance margin, you may have to sell the stock or deposit funds to cover your margin. If your broker asks you to deposit funds into your brokerage account, it is called a margin call.

Things You'll Need

• Calculator

1. • 1
     Express both the percentage margin and maintenance margin as decimals. For example, if the percentage margin is 55 percent, express it as 55/100, which in decimal form is .55. Write these percentages down.
   • 2
     Use the formula "Purchase price x (1.00 - percentage margin) = loan per share" to determine how much you must borrow per share. For example, if you bought stock at $500 per share and your margin is .55, multiply 500 x .45 to get a loan of $225 per share.
   • 3
     Use another formula to determine the price at which you will get a margin call. Divide the loan per share by 1.00 -- the maintenance margin to determine the margin call price. For example, if the maintenance margin is .30 in the example above, divide $225 by .70 for a margin call price of $321.43. If your stock dips below this price, you will get a margin call and must either deposit funds in your stock account or sell some of your stock to increase your equity to the margin amount.