Published On: Thu, Apr 4th, 2013

Margin Requirement

When a trader or investor wants to purchase more options than they have liquid cash for, they can purchase on margin, or credit, typically through a brokerage firm.

This type of purchase uses the purchased shares themselves as the collateral for the borrowed funds. The margin requirement is the amount of money the Federal Reserve Board’s Regulation T requires the investor deposit into the margin account before making any purchases.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.