Series 65: 7.2.1.2.1. Long Positions In Margin Accounts

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7.2.1.2.1. Long Positions in Margin Accounts

When a customer buys 1,000 shares on margin, we say that the customer is “long” 1,000 shares.

Suppose a customer purchases 1,000 shares at $60/share on margin. The long market value (LMV) of the stock is $60,000. Regulation T requires the customer to put down at least 50% of this amount ($30,000) to buy the securities. The following equation is useful for understanding margin:

LMV

–

debit balance

=

equity

$60,000

–

$30,000

=

$30,000

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