Margin Rates

The current Broker Call Rate is 2.00% as of 12/19/2008. Regal's margin rates are 1/2 point above the current Broker Call Rate.

Minimum equity requirements to open a Regal Margin Account:
Cash/Stock $2,000
Cash/Options/Stock $2,000
Margin/Options/Stock $2,000 in marginable securities or cash

Margin Account Minimum Requirements

To open an Regal Discount Securities margin account, you must have at least $2,000 in cash or marginable securities in your account. Additional requirements may apply depending upon specific transactions and positions in your account.

Equities

Minimum Equity Requirements to Use Margin
A combination of: Minimum:
Cash/Marginable Securities $2,000
Short Sales of Equities $2,000
Cash/Options/Stock $2,000
Margin/Options/Stock $2,000 in Marginable Securities or Cash

Note: Long option purchases have an initial and maintenance margin requirement of 100%. For spreads and uncovered options, please see Margin Minimum Equity Requirements below.

Options

Minimum Equity Requirements to Trade Certain Option Strategies
A combination of cash and marginable securities: Minimum:
Spreads $2,000
Equity and Index Spreads $2,000
Spreads in an IRA $2,000, Cash Only
Uncovered Options:  
  Naked Puts $20,000
  Naked Calls $100,000
  Naked Index $500,000

Note: At this time, we do not allow margin borrowing on cash secured short puts, short calls, naked or spread positions.

Important Guidelines

Margin Account Maintenance and Initial Requirements

Stock Transactions
Stocks Initial Requirements Maintenance Requirement
$5.00 and above 50% 30%
$4.99 to $3.00 50% 50%
$2.99 and below 100% 100%

Short Stock Transactions
Stocks Initial Requirements Maintenance Requirement
Short stock sales below $3.00 per share Not allowed Greater of $2.50 a share or 100% of current market value
Short stock sales below $5.00 per share Same as maintenance requirement Greater of $2.50 a share or 100% of current market value
Short stock sales above $5.00 per share Greater of $5.00 a share or 50% of current market value Greater of $5.00 a share or 30% of current market value

Leveraged Long ETF Transactions
Equities Initial Requirements Maintenance Requirement
Leveraged 2x 50% 50%
Leveraged 3x 75% 75%
$2.99 and below 100% 100%

Leveraged Short ETF Transactions
Equities Initial Requirements Maintenance Requirement
Leveraged 2x and above $5.00 Same as maintenance Greater of $5.00 a share or 60% of current market value
Leveraged 3x and above $5.00 Same as maintenance Greater of $5.00 a share or 90% of current market value
Short sales below $5.00 Same as maintenance Greater of $2.50 a share 100% of current market value
Short sales below $3.00 No allowed Greater of $2.50 a share or 100% current market value

Concentrated positions on margin will hold the following requirements:

Note: Percentage of Net Absolute Value = The absolute value of a single marginable position held in a margin account, then divided by the sum of the absolute value of all marginable equities (not including bonds and mutual funds) in a margin account.

Initial Requirements for Options

Marginable Option Transactions
Option Type Initial Requirement Maintenance Requirement
Naked Puts 30% of current market value minus out-of-money amount or 15% of strike, whichever is greater times the multiplier times the quantity 30% of current market value minus out-of-money amount or 15% of strike, whichever is greater times the multiplier times the quantity plus the market value of the option
Naked Calls 30% of current market value minus out-of-money amount or 15% of current market value, whichever is greater times the multiplier times the quantity 30% of current market value minus out-of-money amount or 15% of current market value, whichever is greater times the multiplier times the quantity plus the market value of the option

Note: A minimum of $0.50/share (1 contract = 100 shares) will be held for any naked calls or puts. Position limits are 2,000 contracts when going short and uncovered. The long position limits are determined by the exchange.

Short Option Day Trades

Short option day trades executed by pattern day traders (PDT) will be subject to naked requirements unless an intraday hedge exists. If the option is classified as “hedged” or “strategy,” the greater of the net premium of the strategy requirement will be charged.

The following strategies qualify as an intraday hedge for the purpose of day trade calculations:

Money market funds are not applied towards calculating day trade buying power. Please contact us to have money market funds journaled to the margin type prior to the effective date if you would like to use all funds to calculate day trade buying power. Also, please note it is necessary to shut off sweeps to money market upon trade settlement in order to use all available funds to day trade without interruption. This request must be in writing with a signature.

Margin Risks

We are furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided by your broker. Consult your broker regarding any questions or concerns you may have with your margin accounts.

When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from your brokerage firm. If you choose to borrow funds from your firm, you will open a margin account with the firm. The securities purchased are the firm’s collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and as a result, the firm can take action, such as issue a margin call and/or sell securities in your account, in order to maintain the required equity in the account.

It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:

Click here for some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Contact Regal Discount Securities regarding any questions or concerns you may have about margin accounts.

Revised July 28, 2011