Short margin-call price
Definition · Level 4 · Naked options
Keep reading with Tradecraft
Without a subscription, you can read three definitions every 30 days. Tradecraft explains all 988 terms and strategies, with the lessons that teach them, flashcards that come back before you forget, quizzes and a payoff lab.
The share price above which a short seller’s equity falls below the maintenance requirement: 1.5 × the sale price ÷ (1 + the maintenance rate), in a Regulation T account with no other positions.
Example
Short 100 at 65 with 30% maintenance: the call comes at 75.
Rules and market figures change: check the current ones before relying on this.
Where Tradecraft teaches it
Level 4 · Naked options, in the lesson “The short-stock margin call”: The price at which a short seller is called for more money: where the formula comes from and how to use it.
Related terms
- Short-sale creditWhat a margin account under Regulation T (Reg T) holds after a short sale: the sale proceeds plus 50% initial margin, so 150% of the sale value.
- Blow-upLosing all or most of an account in a single event, usually from oversized short-vol or leveraged positions.
- Borrow cost in option pricesIn a hard-to-borrow stock, short sellers pay the fee through the options: puts trade expensive and calls cheap compared with parity at normal…
- Calendar Spread – CreditBuy the near-term option and sell the longer-term one at the same strike.
- Call Ratio SpreadBuy one call and sell two higher-strike calls.
- Delta hedgingTrading the underlying (or futures) to offset a position’s delta, so small moves barely change the profit and loss; it leaves gamma, theta and vega.