The BasicsBuying on margin is borrowing money from a broker to purchase stock. You can think of it as a loan from your brokerage. To trade marvin margin, you need a margin account. This is different from a regular cash account, in which you trade using the money in the account. By law, your broker is required to obtain your signature to open a margin account. Margin requirements vary by option type. Brokers require investors to deposit margin funds because they may be needed to oprions or sell underlying broker for trading options on margin if the options are exercised.
They may also be needed to close losing positions. Also, some options trading This article needs attention from an expert on the subject. Please add a reason or a talk parameter to this template to explain the issue with the article. Consider associating this request with a WikiProject. (April 2012)In finance, margin is collateral that the holder of a financial instrument has to deposit with a counterparty (most often their broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty.
There are just two possible outcomes: the price of the asset can be higher or lower than the current price.
Broker for trading options on margin