When do margin calls go out? It is important for investors to know that brokerage firms have a lot of discretion when it comes to requiring margin calls. Although some will try to contact account holders to notify them of the need for margin, they are not required to do so. Margin calls are simply a way for brokerages to increase account equity or sell securities without regard to financial obligations. In many cases, the brokerage firm will notify you only after it has reached the required level of account equity.
Often, a margin call will appear in a large banner on the website when an investor logs in. If you do not receive a margin call, you have about two or five business days to raise your equity value and meet your obligations. Fortunately, there are ways to protect yourself from getting hit with a margin call. You can deposit cash, liquidate positions you were about to exit, roll out options, and even wait out a minor margin call to build up your equity.
As long as you’ve followed your brokerage’s rules and adhered to their rules, you should be safe. A margin call means that your account’s equity has fallen below the minimum amount required by the brokerage firm. When it happens, you’ll have to make up the difference by selling assets or adding more cash. While this is important for maximizing your returns, it can also magnify your losses. If you get a margin call, don’t panic. You’ll soon be back in business!
