Margin Requirements
Margin Requirements for Equities Trading *
| Stock Position** | Market Price | Initial Requirements | Maintenance Requirement |
|---|---|---|---|
| Long | $2.00 or less | 100% | 100% |
| $2.01 – $5.00 | 50% | Greater of $2.00 or 50% | |
| $5.01 or more | 50% | 30% | |
| Short | $5.00 or less | $2.50 | Greater or $2.50 or 100% |
| $5.01 or more | Greater of $5.00 or 50% | Greater of $5.00 or 40% |
* There is a minimum equity requirement of $25,000 for the initial transaction.
** Margin is available on Reg NMS stocks. Non-Reg NMS stock will be held at 100% and may not be sold short
Special Margin Requirements for Concentrated Accounts
If one equity accounts for more than 40% of the total margin account’s value, then the maintenance requirement for that equity security will be adjusted based on the size of the concentrated security relative to the account.
| % Concentration of Long Security | Account’s Maintenance Requirement* |
|---|---|
| 40% – 54.99% | 40% |
| 55% – 69.99% | 50% |
| 70% – 84.99% | 60% |
| 85% – 100% | 70% |
* Stocks priced below $5.01 has a requirement of no less than 50%.
Margin Requirements for Leveraged ETFs and ETNs*
| Long Positions (25% x Leverage Factor) | Short Positions (30% x Leverage Factor) | |
|---|---|---|
| Leveraged at 2x | 50% | 60% |
| Leveraged at 3x | 75% | 90% |
* The margin requirement is subject to change.
Margin Requirements for Investment Grade Bonds*
| Bond Type | Initial Requirement | Maintenance Requirement** |
|---|---|---|
| Corporates | 50% | 50% |
| Convertibles | 50% | 30% |
| Municipal | 50% | 30% |
| Treasury | 10% | 10% |
* Bonds must be priced daily by a third-party pricing service.
* Special maintenance requirements may be required on bonds selling below 40% of principal amount.
Margin Requirements for Options Trading
Option Levels
There are six levels of option trading. Each subsequent level includes the prior level option strategy. You are required to give the client an OCC Options Disclosure Booklet & Statement for Uncovered Option Writers when opening an options trading account.
| Level | Strategy | Margin Required? |
|---|---|---|
| 1 | Covered Equity Call Writing | No |
| 2 | Purchasing Equity/Index Puts and Calls | No |
| 3 | Equity/Index Spreads | Yes |
| 4 | Uncovered Equity Puts* | Yes |
| 5 | Writing Equity/Index Combinations/Straddles & Uncovered Equity Calls | Yes |
| 6 | Uncovered Index Puts, Calls, & Straddles | Yes |
* Cash secured Puts do not require a margin agreement. Sufficient cash must be in the account to purchase the underlying security if assigned.
Option Margin Requirements
| Option Position and/or Strategy | Minimum Requirements |
|---|---|
| Long Options | 100% of Purchase Price |
| Spread Options | $5,000 minimum equity |
| Naked Options | $100,000 minimum equity for the Naked Equity/Index Calls $100,000 minimum equity for the Naked Equity/Index Puts The initial and maintenance requirements are the greater of either: Other Premiums + 30% of Underlying – Out of the Money Or Option Premium + 10% of Underlying for Calls Option Premium + 10% of Strike Price for Puts |
| Long Straddles | Cost of Call + Cost of Put |
| Short Straddles | Greater of the short call or short put requirement plus premium for the other side. |
| Call Bull Spreads | Cost of the Long Call – Premium of the Short Call |
| Put Bull Spreads | Cost of the Long Put + the lesser of: the Short Put exercise price minus the Long Put exercise price or the margin requirement for the short Put. (The premium received from the sale can be used to cover the buy of the long option.) |
| Call Bear Spreads | Cost of the Long Call + the lesser of: the Long Call exercise price minus the short Call exercise price or the margin requirement of the Short Call. (The premium received from the sale can be used to cover the buy of the long option.) |
| Put Bear Spreads | Cost of the Long Put – Premium of the Short Put |
| Butterfly Spreads | Cost of the Long Options (same expiration date on all options) |
| Condor Spreads | Cost of the Long Options + the greater of: the amount the Short Call exercise is below the Long Call exercise price or the amount the Long Put exercise price is below the short Put exercise price (same expiration date on at least 3 of the options in the condor) |
Non-Marginable Securities
AXOS Clearing does not margin the following securities:
- Foreign Securities
- Real Estate Mortgage Investment Conduits (REMICs)
- Collateralized Mortgage Obligations (CMOs)
- Certificates of Deposit
- Non-Investment Grade Bonds (Bonds rated below “BBB-“)
- Securities priced below $2.00
- Control and Restricted Stock
Changes to COR’s Maintenance Margin Requirements
COR reserves the right to limit margin purchase and short sales, and to alter its margin requirements due dates for “house” or other margin calls, in accordance with the firm’s guidelines, market conditions, and regulatory margin requirements. COR reserves these rights without the requirements to provide notice of any sort to the client.
Pattern Day Traders
Per FINRA rule 4210, an account is classified as a pattern day trader when the account day trades four or more times over five trading days. Accounts, which are classified as pattern day traders, are required to have a minimum equity of $25,000. Day trade accounts are also subject to special margin requirements called “Day Trading Buying Power.” Day trading buying power is calculated by taking account equity at the close of the previous day less any regulatory maintenance requirement as stated in the rule multiplied by four (4) for equity securities. Other security type requirements are determined based on their specific regulatory requirement. AXOS Clearing uses the “Time and Tick” method for calculating day trade violations.
* If your account is classified as a “Pattern Day Trader” under FINRA Rule 4210 you must liquidate the position you held overnight first before you purchase additional shares of the same position you held overnight. If you do not liquidate first your account will be subject to a “Day Trading Call”. If the call is not met the account could be restricted from trading for 90 days
Margin Calls
| Type of Call | Definition | When Call is Issued |
|---|---|---|
| Initial Call (also known as “Fed Call”) | – Call is generated from trades. – It is due five days after the trade date (T+S also called “REG T Date”). – An extension can be required if there is a valid reason. – The call cannot be met with market appreciation. – If the account sells the same security as what created the call, then the account is restricted for ninety days. |
Call is issued when the account cannot meet the initial margin requirement at the time of the trade COR does not issue calls of less than $100. |
| Regulatory Maintenance Call | – Call is generated when the margin account’s equity drops below the minimum regulatory maintenance requirement. – It is due within two days of being issued. – No extensions are available. – The call can be met with the market appreciation using the closing price from ether the day prior to the due date or the due date. |
Call is issued when the account’s equity drops below the regulatory maintenance requirement. COR does not issue calls of less than $100. |
| AXOS Clearing / IBD Maintenance Call (also known as “House Call”) | – Call is generated when the margin account’s equity drops below the minimum house maintenance requirement. – It is due within five days of being issued. – No extensions are available. – The call can be met with market appreciation using the closing prices from either the day prior to the due date or the due date. |
Call is issued when the account’s equity drops below the house maintenance requirement. COR does not issue house calls of less than $500. |
| Day Trade (D) Call | – Call is generated from day trades. – It is due within five days of the day trade. – The call can only be met by bringing in cash or other collateral. – During the time the call is outstanding, the account’s day trade buying power is only the aggregate of 2x the regulatory excess. (No time and tick) |
Call is issued when the account day trades greater than its day trade buying power. COR does not issue calls of less than $100. |
| Day Trade (Q) Call | – Call is generated when a “pattern day trader” account day trades without having the $25,000 minimum equity. – It is due immediately. – The account is restricted from day trading until the minimum equity is met. If another day trade is executed while the call is in effect, then the trades are moved to the introducing broker dealer’s error account, and the account is subject to closure. |
Call is issued when the account day trades without $25,000 in equity. COR does not issue calls of less than $100. |