Short Margin Account Calculations
Chapters in this video
- 0:00 The bizarro world of short selling
- 0:57 Short selling's upside-down math: CR minus SMV
- 2:09 Carla's initial short sale: the locked credit balance
- 4:08 Winning: price drops, equity jumps
- 5:27 Losing: price spikes, restricted versus maintenance call
- 7:01 Long versus short side-by-side comparison
- 7:47 Rapid-fire exam recap
What this video covers
- Why short margin equity equals credit balance (CR) minus short market value (SMV), and how this mirrors long margin in reverse
- How Regulation T (Reg T) sets the initial credit balance at 150% of SMV (100% sale proceeds plus 50% customer deposit)
- Why the credit balance is fixed against market fluctuations after inception, and how exam writers bait you into recalculating it
- How equity moves opposite to stock price (price down = equity up), and what excess equity means for selling power
- What a restricted short account is, and why it differs from a maintenance call
- When a maintenance call is triggered at 30% of SMV under Financial Industry Regulatory Authority (FINRA) rules, and why short maintenance exceeds long maintenance
- How long and short margin accounts compare side by side on fixed value, variable value, equity formula, profit condition, and maintenance minimum
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