Interactive Broker Margin

[cpatte7372]

Hello,

I'm thinking of opening margin account with Interactive Broker. I was wondering if they're anyone who has opened a margin account with IB and if they could let me know how it actually works. I'm pretty clueless when it comes to margin so anyhelp you can provide will be greatly appreciated.

Cheers

Carlton

[soylent]

You don't have a margin account w/ them already? I didn't know they had any other kind...

Anyhow, I have one w/ them. They do just fine so far (one month).

As for margin, it's very simple: It's a loan.

You use the stock as collateral. If the stock drops too much & IB feels @ risk, they sell the stock & give you the difference (the value of stock minus how much you borrowed). And, they charge interest on the loan while you own the stock.

Generally, you can borrow 50% of the value of the stock. e.g.:
MSFT @ $50 x 1000 shares = $50K. You use $25K and borrow $25K from IB to buy it.

-c

[cpatte7372]

Hey Soylent,

Thanks mate, great explanation.

Cheers

Carlton