I hope this help you understand what exactly margin is, and how you should be using it. If you have any questions, let me know in the comments, I respond to as many as I can. Recommended Links & Videos: My Trading Routine: mytradingroutine.com/ How To Fly Rescue Missions: ruclips.net/video/o70hJ53LzDQ/видео.html The Ultimate Guide To The PowerX Strategy: ruclips.net/video/6C_ac36iXMw/видео.html The Wheel Strategy Explained: ruclips.net/video/EcsErh9Airs/видео.html
I know an old video but your maintenance margin calculation seems off. At 8:05 you calculate maintenance margin ar per cent of total portfolio value but it should be as a per cent of the loan. So instead of 4000 maintenance should be 2500. Your own equity obviously isn't included because you did not loan that, it's yours.
Markus this is New information. I am trading cash only. However my P&L is growing with better trading skills developing. So margin is now of interest so I am researching margin. Your video has educated me like few or no others from RUclips channels. I have subscribed and look for viewing your videos Markus. Thank you❤
That's why one should have a protective put to guard against margin calls. In this case you're able to exercise your option at your selected strike price and avoid too much losses. You could buy your protective put immediately after buying your shares just at the money using a collar strategy to cover the cost of the bought put. These way you're covered. Just know the price per share before margin call is issued and note it down. Keep selling more covered calls using free margin for good premium returns. That can be a good strategy right Mark???
Thank you Markus! This is hands down the best video I've seen on RUclips about Margin. That margin maintenance part helped out significantly. I had no idea how it was actually calculated. Thanks again! You rock! 🥳
you are missing the best part about portfolio margin: while it is not for investing and not ideal for wheeling, it is best for delta neutral or slightly directional premium selling with dynamic BP allocation based on implied volatility
Very helpful video, I am new to margin with options. In your $10,000 example, say I have used $8000 for stock and using LESS than $2000 for options (iron condors, selling puts etc) to stay under the $10,000 account. Even though I have not gone over $10,000 would the margin requirements only apply to the options portion, since a margin account is required for those types of option strategies? Now lets say my options go over $3000 in margin, how would that affect my stocks, since I am trying to only buy stocks with cash? Can I assume my margin is now a combination of the margin required for options and now that excess $1000 could affect my stocks in a bad case scenario?
Awesome! Thank you for your kind feedback. If you want to simplify how you trade I recommend you use the PowerX Software if you haven't yet. Here is a special promo for you rockwell.infusionsoft.com/app/orderForms/PowerX-Optimizer?promo=cristyspecial. Use that today to get the PowerX Optimizer at a discounted price (From $2997 to $1997 only!) Plus all the perks are included in our bundle offer. Look for Cristy at support@rockwelltrading.com if you need assistance.
I have a margin account with Interactive Brokers. My money deposited are 40K but my buying power is 200K...so I didn't know why. Is not more correct 80K in buying power?
Yes, it's a little bit confusing at Interactive Brokers: They display the DAY TRADING buying power, which is 5x. The overnight buying power is only 2x, so $80,000 is correct. I wish they would display it in a different way to be less confusing!
That's correct. Margin gives you more leverage, and leverage is a double-edge sword: It can work for you as well as against you. So make sure you understand what you're getting yourself into when considering trading on margin. Are you currently trading a cash account or a margin account?
Hi Markus, great video! I have a question.. Can I borrow money from the broker by the moment I exercised? Or is there no that possibility? Cheers from Italy
thank you for the explanation :)) how can one know how much of the portfolio is runned on margin and how much can a stock goes against you before it wil lget a margin call ?
based on the expample you show in minute 9.00, how can I calculate in adavance how much room I can allow to the stock to drop, before it gates a margin call ? is there any equation to that ?
I would love to hear your thoughts on how to use margin responsibly day-to-day in a day trading account (I know you stopped day trading though). I've kind of been rolling into positions at about 1/3 of the cash value and usually one at a time up to three per day not holding anything overnight. I never touch the margin or activate any interest payments. My theory is this way I could manage a few wheel trades at the same time if I want to, but I have not jumped into that yet because I want to be sure of my plan.
Well, if you are DAYTRADING you usually have LESS risk since you're not holding a position overnight. That's why sometimes you get 4:1 leverage instead of just 2:1 leverage. However, even though there's "less risk", there still is risk. Recently, we saw the Nasdaq moving 2-3% in a day. Depending on your strategy, that could hurt you. So even if you get 4:1 leverage, I would probably still only use 2:1 leverage. Does this help?
If the stock goes up 12% a year and you have a margin loan, you would typically pay the interest on the margin loan using the profits generated from the stock appreciation. As the value of your stock increases, you can sell a portion of your holdings to cover the interest payments on the margin loan. It's important to carefully monitor your investments and ensure that you have a strategy in place to manage both the stock growth and the interest payments on the margin loan to avoid any potential risks or financial challenges.
Markus thank u for the channel.. I am watching lots of ur educational vids and now I understand what options is .. I want to ask you if u can trade only one asset for example one etf only … by doing this you can dollar average if things go bad .. I am only working with 25000 dollars so my budget is limited
If you have $25,000, I would trade up to 3 positions and only choose stocks with strike prices of $40 and below. This way you can diversify, even on a small account. Does this help?
Awesome! Thank you for your kind feedback. If you want to simplify how you trade I recommend you use the PowerX Software if you haven't yet. Here is a special promo for you rockwell.infusionsoft.com/app/orderForms/PowerX-Optimizer?promo=cristyspecial. Use that today to get the PowerX Optimizer at a discounted price (From $2997 to $1997 only!) Plus all the perks are included in our bundle offer. Look for Cristy at support@rockwelltrading.com if you need assistance.
Hey Markus, can you do a vid on the diff between Stock Buying power and Option Buying power? TD offers the ability to sell puts at a greatly reduced rate based on margin. Deal is, you don't have to fund a full CSP. You only have so put up a small percentage of the CSP. Way confusing and almost got me in trouble as if the stock is assigned, that's when you feel the FULL CSP using margin. You could mistakenly sell a lot of puts not realizing if they all fill you will have to cover all those CSP's and possibly use all the margin available to you.
By the way, here is the link rockwell.infusionsoft.com/app/orderForms/PowerX-Optimizer?promo=cristyspecial. Use that today to get the PowerX Optimizer at a discounted price (From $2997 to $1997 only!) Plus all the perks are included in our bundle offer. Look for Cristy at support@rockwelltrading.com if you need assistance.
Hi Markus, brilliant video and I love your sharing of valuable information and experience. I am looking to trade the wheel strategy to generate income on an ongoing basis. Assuming a $200k input and thus having buying power of $400k, would it be safe to stay within a max usage of $100k of the loan, ie use up to $300k for cash secured puts and covered calls, thus avoiding the chance of a margin call? Also, do you recommend using put options as a hedge on each trade, particularly during turbulent / bear market conditions? For a $300k spend, would you limit stock picks to say4? Thankyou!!!!
Yes, you could do that. This way, you have a buffer. Or, you could keep this "buffer" outside of your trading account and only put $150k in there = $300k buying power. I personally like the idea of keeping some money away from the trading account. What do you think?
@@rockwelltradingservices Yes, that was another option I was considering and that may be the best way forward. Thankyou for getting back to me, love your work
I hope this help you understand what exactly margin is, and how you should be using it. If you have any questions, let me know in the comments, I respond to as many as I can.
Recommended Links & Videos:
My Trading Routine: mytradingroutine.com/
How To Fly Rescue Missions: ruclips.net/video/o70hJ53LzDQ/видео.html
The Ultimate Guide To The PowerX Strategy: ruclips.net/video/6C_ac36iXMw/видео.html
The Wheel Strategy Explained: ruclips.net/video/EcsErh9Airs/видео.html
I know an old video but your maintenance margin calculation seems off. At 8:05 you calculate maintenance margin ar per cent of total portfolio value but it should be as a per cent of the loan. So instead of 4000 maintenance should be 2500. Your own equity obviously isn't included because you did not loan that, it's yours.
Markus this is New information. I am trading cash only. However my P&L is growing with better trading skills developing. So margin is now of interest so I am researching margin. Your video has educated me like few or no others from RUclips channels. I have subscribed and look for viewing your videos Markus. Thank you❤
Awesome! I am glad that you are learning from this channel. Thank you for subscribing!
That's why one should have a protective put to guard against margin calls. In this case you're able to exercise your option at your selected strike price and avoid too much losses. You could buy your protective put immediately after buying your shares just at the money using a collar strategy to cover the cost of the bought put. These way you're covered. Just know the price per share before margin call is issued and note it down. Keep selling more covered calls using free margin for good premium returns. That can be a good strategy right Mark???
Thank you Markus! This is hands down the best video I've seen on RUclips about Margin. That margin maintenance part helped out significantly. I had no idea how it was actually calculated. Thanks again! You rock! 🥳
I am glad that this helps. Are you already using my favorite trading tool, The PowerX Optimizer?
you are missing the best part about portfolio margin: while it is not for investing and not ideal for wheeling, it is best for delta neutral or slightly directional premium selling with dynamic BP allocation based on implied volatility
Well said
Thanks for the information.👍
Awesome presentation. Very clear and to the point. Congratulations Markus!
Thank you for watching and for your support!
Very professional ✌
Thank you for watching!
Very helpful video, I am new to margin with options. In your $10,000 example, say I have used $8000 for stock and using LESS than $2000 for options (iron condors, selling puts etc) to stay under the $10,000 account. Even though I have not gone over $10,000 would the margin requirements only apply to the options portion, since a margin account is required for those types of option strategies?
Now lets say my options go over $3000 in margin, how would that affect my stocks, since I am trying to only buy stocks with cash? Can I assume my margin is now a combination of the margin required for options and now that excess $1000 could affect my stocks in a bad case scenario?
Brilliant training! Thanks Markus
😊 You are welcome! I am glad that this helps!
Timeless great video! Thank you.
Awesome! Thank you for watching.
Cant watch these enough, especially the maintenance side, thanks for explaining mm!
Awesome! Thank you for your kind feedback.
If you want to simplify how you trade I recommend you use the PowerX Software if you haven't yet. Here is a special promo for you rockwell.infusionsoft.com/app/orderForms/PowerX-Optimizer?promo=cristyspecial. Use that today to get the PowerX Optimizer at a discounted price (From $2997 to $1997 only!) Plus all the perks are included in our bundle offer. Look for Cristy at support@rockwelltrading.com if you need assistance.
I have a margin account with Interactive Brokers. My money deposited are 40K but my buying power is 200K...so I didn't know why. Is not more correct 80K in buying power?
Yes, it's a little bit confusing at Interactive Brokers: They display the DAY TRADING buying power, which is 5x. The overnight buying power is only 2x, so $80,000 is correct. I wish they would display it in a different way to be less confusing!
Great review Marcus. It would appear that margin only exists to allow greater speculation (assuming the market place fair to begin with).
That's correct. Margin gives you more leverage, and leverage is a double-edge sword: It can work for you as well as against you. So make sure you understand what you're getting yourself into when considering trading on margin. Are you currently trading a cash account or a margin account?
Great video. Thanks
😊 You are welcome! I am glad that this helps!
Hi Markus, great video! I have a question.. Can I borrow money from the broker by the moment I exercised? Or is there no that possibility? Cheers from Italy
Amazing video .
Thank you!
thank you for the explanation :)) how can one know how much of the portfolio is runned on margin and how much can a stock goes against you before it wil lget a margin call ?
based on the expample you show in minute 9.00, how can I calculate in adavance how much room I can allow to the stock to drop, before it gates a margin call ? is there any equation to that ?
how can I know once (I am already invested) how much money is mine and how much is a brorrow from the broker ?
excellent.
Thank you!
I would love to hear your thoughts on how to use margin responsibly day-to-day in a day trading account (I know you stopped day trading though). I've kind of been rolling into positions at about 1/3 of the cash value and usually one at a time up to three per day not holding anything overnight. I never touch the margin or activate any interest payments. My theory is this way I could manage a few wheel trades at the same time if I want to, but I have not jumped into that yet because I want to be sure of my plan.
Well, if you are DAYTRADING you usually have LESS risk since you're not holding a position overnight. That's why sometimes you get 4:1 leverage instead of just 2:1 leverage. However, even though there's "less risk", there still is risk. Recently, we saw the Nasdaq moving 2-3% in a day. Depending on your strategy, that could hurt you. So even if you get 4:1 leverage, I would probably still only use 2:1 leverage. Does this help?
If the stock goes up 12% a year, how do I pay the interest on the margin loan?
If the stock goes up 12% a year and you have a margin loan, you would typically pay the interest on the margin loan using the profits generated from the stock appreciation. As the value of your stock increases, you can sell a portion of your holdings to cover the interest payments on the margin loan. It's important to carefully monitor your investments and ensure that you have a strategy in place to manage both the stock growth and the interest payments on the margin loan to avoid any potential risks or financial challenges.
Why can’t I just buy the stock at the price it cost and that be it
Markus thank u for the channel.. I am watching lots of ur educational vids and now I understand what options is .. I want to ask you if u can trade only one asset for example one etf only … by doing this you can dollar average if things go bad .. I am only working with 25000 dollars so my budget is limited
If you have $25,000, I would trade up to 3 positions and only choose stocks with strike prices of $40 and below. This way you can diversify, even on a small account.
Does this help?
@@rockwelltradingservices yes it helps .. I didn’t know what option trading was before knowing your channel .. so thank u again
Awesome! Thank you for your kind feedback.
If you want to simplify how you trade I recommend you use the PowerX Software if you haven't yet. Here is a special promo for you rockwell.infusionsoft.com/app/orderForms/PowerX-Optimizer?promo=cristyspecial. Use that today to get the PowerX Optimizer at a discounted price (From $2997 to $1997 only!) Plus all the perks are included in our bundle offer. Look for Cristy at support@rockwelltrading.com if you need assistance.
Hey Markus, can you do a vid on the diff between Stock Buying power and Option Buying power? TD offers the ability to sell puts at a greatly reduced rate based on margin. Deal is, you don't have to fund a full CSP. You only have so put up a small percentage of the CSP. Way confusing and almost got me in trouble as if the stock is assigned, that's when you feel the FULL CSP using margin. You could mistakenly sell a lot of puts not realizing if they all fill you will have to cover all those CSP's and possibly use all the margin available to you.
Will do! Thanks for the tip.
Hi Marcus
Is the power X works with any broker or you have to use specific broker?
Hi Emmanuel. It works with any broker. But we recommend Tradier because it is integrated in the PowerX Optimizer. ;)
By the way, here is the link rockwell.infusionsoft.com/app/orderForms/PowerX-Optimizer?promo=cristyspecial. Use that today to get the PowerX Optimizer at a discounted price (From $2997 to $1997 only!) Plus all the perks are included in our bundle offer. Look for Cristy at support@rockwelltrading.com if you need assistance.
Hi Markus, brilliant video and I love your sharing of valuable information and experience. I am looking to trade the wheel strategy to generate income on an ongoing basis. Assuming a $200k input and thus having buying power of $400k, would it be safe to stay within a max usage of $100k of the loan, ie use up to $300k for cash secured puts and covered calls, thus avoiding the chance of a margin call? Also, do you recommend using put options as a hedge on each trade, particularly during turbulent / bear market conditions? For a $300k spend, would you limit stock picks to say4? Thankyou!!!!
Yes, you could do that. This way, you have a buffer. Or, you could keep this "buffer" outside of your trading account and only put $150k in there = $300k buying power. I personally like the idea of keeping some money away from the trading account. What do you think?
@@rockwelltradingservices Yes, that was another option I was considering and that may be the best way forward. Thankyou for getting back to me, love your work
Don't lose money?
Lol! Yes, ;)
what can you say about. Avoid Trading on Margin.
Don't trade on margin until you fully understand the risks!
How to avoid Margin Calls............USE A STOP LOSS!!!!
Wait… I thought I could just turn my phone off
Lol. I hope that's how simple it is.
no this is not accurate never use margin
excellent.
Thank you!