## Step 1

#### Step

Calculate the amount of money per share borrowed from your broker for your margin trade. To do this, subtract the margin requirement from 1 and multiply by the market (purchase) price. Suppose you buy stock at $40 per share with a 60 percent margin requirement. The amount you borrow is equal to $40 x (1 – 0.60), or $16 per share.

## Step 2

#### Step

Calculate the maximum percentage of borrowed money allowed by the maintenance margin. Simply subtract the maintenance margin requirement from 1. For example, if your broker sets the maintenance margin at 25 percent, the maximum allowable percentage of borrowed funds is equal to 1 minus 0.25, or 0.75 (75 percent).

## Step 3

#### Step

Divide the amount per share you borrowed by the maximum percentage of borrowed funds you are allowed. If you borrowed $16 per share and the maximum percentage of borrowed funds is 75 percent, you have $16.00/0.75 = $21.33. This is your maintenance margin in dollar terms. If the market price falls to $21.33 or lower, your broker will issue a margin call. You must either deposit more money or your broker will close out the transaction to recover the money you borrowed.