Maintenance Margin Calculator

Formula

The formula to calculate the Maintenance Margin (MM) is:

\[ MM = \frac{BPS}{\left(\frac{BA}{100}\right)} \]

Where:

$ MM $ is the Maintenance Margin ($).
$ BPS $ is the Amount Borrowed Per Share ($).
$ BA $ is the Maximum Percentage Allowed to be Borrowed (%).

What is Maintenance Margin?

A maintenance margin is defined as the minimum equity per share that an investment is required to have on hand in order to avoid a margin call. In other words, the minimum price a share can hit before a margin call is issued.

Example Calculation

Consider an example where:

Amount Borrowed Per Share (BPS): $50
Maximum Percentage Allowed to be Borrowed (BA): 50%

Using the formula to calculate the Maintenance Margin:

\[ MM = \frac{50}{\left(\frac{50}{100}\right)} = 100 \text{ dollars} \]

This means that the maintenance margin for this example is $100.