Margin call price for short position

CFA Level I Equities
#1

Hi everybody,

Kindly, how should we proceed to calcultate the price that will trigger a margin call in the case of a short position ?

I don’t think we can use the formula in the reading stating that the margin call price as = P0 *( 1- intial margin)/(1-maintenance margin) ??. as intial margin is normally > Maintenance margin (MM), the margin call price sould be < P0. wherease in a short position the price that will trigger MC should be > P0.

Thx for the help guys

#2

I wrote an article on margin call prices that covers this: http://financialexamhelp123.com/margin-call-price/

#3

thx Magician, you’re so sweet :slight_smile:

#4

You’re too kind.

You’re quite welcome.