Margin Trading from A to Z

Margin Trading from A to Z offers a step-by-step explanation of the mechanics of the margin account. Filled with in-depth insights and expert advice, this book uses a hands-on approach to show how a Regulation T Margin Call is arrived at; how it may be answered; and how an account looks once a call is issued and after the call is met. Other items covered by this detailed guide include minimum maintenance requirements, short selling, memorandum accounts, options, hedge funds, and portfolio margining. The book includes quiz questions and a comprehensive exam.

Margin Trading from A to Z offers a step-by-step explanationof the mechanics of the margin account. Filled with in-depthinsights and expert advice, this book uses a hands-on approach toshow how a Regulation T Margin Call is arrived at; how it may beanswered; and how an account looks once a call is issued and afterthe call is met. Other items covered by this detailed guide includeminimum maintenance requirements, short selling, memorandumaccounts, options, hedge funds, and portfolio margining. The bookincludes quiz questions and a comprehensive exam.

Preface xiAbout the Author xvCHAPTER 1 Cash Accounts 1Sale of Securities 3Paying for Securities by the Sale of Other Securities 3Delivery against Payment 4Employee Stock Options 6Chapter One Questions 7CHAPTER 2 Initial Federal Margin Requirements 9Purchases 9Sales 16Meeting a Margin Call 17Chapter Two Questions 19CHAPTER 3 Initial and Minimum Maintenance Requirements 21Initial Requirements 21House Requirements 23NYSE Minimum Maintenance Requirements 23Chapter Three Questions 29CHAPTER 4 The Special Memorandum Account 31Customer's Account 35Chapter Four Questions 42CHAPTER 5 Short Sales 45Covering Short Sales 51NYSE Minimum Maintenance Requirements 52Sample Transactions 53Short Sale versus the Box or Short against the Box 55Prime Broker 59Chapter Five Questions 62CHAPTER 6 Bonds 65U.S. Government Securities 67Zero-Coupon Government Obligations 67Municipals 69Nonconvertible Corporate Bonds 72Chapter Six Questions 74CHAPTER 7 Miscellaneous Categories 77When-Issued and When-Distributed Transactions 77Customer's Accounts 78Marks to the Market 80When-Distributed Securities 80Segregation of Customers' Securities 80Review of Customers' Accounts 81Interest Charges 83Margin on New Issues 85Day Trades 85Requirements for a Pattern Day Trader 86Time and Tick 87Chapter Seven Questions 89CHAPTER 8 Options 91Definitions 92Additional Definitions Related to the Types of Options 93Examples 95Requirements for the Purchase and/or Sale of Options 100Long-Term Equity Anticipation Securities 101LEAPS 101LEAPS Example 102Bull Spread Call Debit 106Bear Spread Call Credit 107Bull Spread Put Credit 107Bear Spread Put Debit 108The American Style 108The European Style 108Other Types of Options 108Index Options 108Interest Rate Options 109Additional Details Concerning Options 113Chapter Eight Questions 114CHAPTER 9 Portfolio Margining 121Margin Deficiencies 125Chapter 9 Questions 126Eligible/Hedged/Unhedged Positions 126Account Set-up 126Unlisted Derivatives 126Liquidations 127APPENDIX A The Federal Reserve 129APPENDIX B Customer Margin Account and SMA Sheets 137APPENDIX C Answers to Chapter Questions 139APPENDIX D Final Examination Questions 151APPENDIX E Final Examination Answers 161Glossary of Terms 169Index 177