Margin Call
Broker demand for additional account funds
What is Margin Call?
Margin Call A broker's demand that an investor deposit additional funds or securities when the account equity falls below the required maintenance margin. Naked option positions and short stock can trigger margin calls during adverse moves. Defined-risk spreads significantly reduce margin call risk.
Complete Definition
A broker's demand that an investor deposit additional funds or securities when the account equity falls below the required maintenance margin. Naked option positions and short stock can trigger margin calls during adverse moves. Defined-risk spreads significantly reduce margin call risk.
Example
You sold naked puts and the stock dropped 20%. Your broker issues a margin call requiring you to deposit more funds or close positions.
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