The margin calculator here should indicate the initial margin requirements which are usually the same as the MM provided the ticker doesn't have any volatility guards in place i.e. $TSLA or biotech stocks etc. The source for 33% $SPY in March has just been from reading comments/threads on EliteTraders and /r/InteractiveBrokers so nothing I can find easily again.Steve Reading wrote: ↑Mon Nov 16, 2020 8:41 am
I'm still not sure what you mean. I went there and looked up various tickers stock tickers and the MM just said "default". Nothing with 15%. And how did you find out what the MM for SPY was back in March? Thanks.
I agree that's what your "equity margin cushion" is. But the crucial question is "how much do stocks need to drop, to make an equity margin cushion go to 0% and trigger auto-liquidation?". These are NOT the same numbers. In this case, it is -42.8%. As such:
Start with 296,125, borrow 250,271. You have a total of 546,396 in positions, with a MM of 109,125. Note that the MM is exactly 20% of the position size, which is about what I've found in my personal portfolio of index ETFs.
Now if the market dropped -42.8%, your positions would go 546,396 -> 312,538. Your NLV is 312,538-250,271 = 62,267. Your MM would still be 20% of the (62,507). Note that your NLV is basically right at the MM, so liquidation would begin.
So in our example we have 546,396 in positions yes, but our MM of 109,125 only applies to the equity portion of the portfolio. The NLV does not include equities bought with margin. We could take this margin loan and cash it out into your bank account and IB would have no idea what is happening with that money, they only care about what your initial (equity portion) of your portfolio does. Lets say we take our 250,271 dollars cashed out into our bank account. In my paper account example we are at 1.85 leverage and our MM is currently 109,303 (~37%) of my equity (not total portfolio) A 42.8% drop would leave us with 169,383, meaning we will not be margin called until our 169,383 drops a further 60,080 aka a ~35% cushion on top of our portfolio even after the 42% drop. As we get a bigger and bigger margin loan, the key number that changes is our Excess Liquidity which is (ELV - MM). You can find the definitions of NLV and ELV here. At no point does either definition include the balance of the margin loan