What is a Concentrated Maintenance (CM) Call? | Robinhood

What is a Concentrated Maintenance (CM) Call?

Concentrated Maintenance Calls

Concentrated Maintenance (CM) calls are issued when you're using more than $500,000 or more in margin and you're concentrated in a single security.

Being concentrated means you hold at least 70% of your securities portfolio (excluding any crypto positions) in a single security. When this happens, the maintenance requirement for the security you're concentrated in increases to 40% (if the underlying ticker has a maintenance ratio less than 40%), though in some circumstances it may be higher.

Keep in mind

Reducing the borrowed amount to less than $500,000, or reducing your position in the security so that you're no longer concentrated in it, will return the maintenance requirement for the security to its natural ratio of less than 40%.

While your brokerage account has a CM call, we’ll prevent you from buying securities to avoid increasing the amount of the call.

You'll need to deposit money or sell securities to return your account to good standing. If you’re unable to deposit or sell securities by the date your call is due, we may liquidate your positions to cover the call.

Keep in mind

We reserve the right to close some of your positions at any time when you're in a margin call.

Example

Let’s say you end the day with $650,000 of margin used, and 100% of your securities portfolio is invested in MEOW. If the total market value of your MEOW shares is $1,000,000, your securities portfolio value (excluding any crypto positions) would be $350,000. Because MEOW’s margin maintenance requirement is normally 35% but is now 40%, it’d result in a concentrated maintenance call of $50,000. The call would cover the difference between the securities portfolio value of $350,000 and the maintenance requirement of $400,000.

Tips for meeting your CM call:

Depositing cash: In the previous example, you could deposit $50,000 to cover the call, or sell $50,000 in non-marginable securities.

Selling marginable securities: In the previous example, you could sell marginable securities to cover the call. Marginable securities have a maintenance requirement of less than 100%, meaning that you won’t get the full dollar value of your sales applied to your CM call. Since these securities have a maintenance requirement of at least 40%, you'll need to take the call amount of $50,000 and divide it by the maintenance requirement of the position you are selling to determine the dollar value of the shares you would need to sell to cover the call.

Example

If your call amount is $50,000, you'd need to sell $125,000 of marginable securities with a maintenance requirement of 40% to meet the call.

$50,000 divided by 0.40 = $125,000

Selling non-marginable securities: In the previous example, you could sell non-marginable securities to cover the call. Non-marginable securities have a 100% maintenance requirement. You can sell 1x the call amount because these securities get a 100% release from sales.

Example

If your call amount is $50,000, you'd need to sell at least $50,000 of non-marginable securities to meet the call.

$50,000 divided by 1.00 = $50,000

Disclosures

Any examples provided are for illustrative purposes only. All investments involve risk and loss of principal is possible. Margin investing involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation.

For more information, please see FINRA’s Investor Alert and Robinhood Financial’s Customer Relationship Summary, Margin Disclosure Statement, and Margin Agreement. These disclosures contain important information on Robinhood Financial’s products and services, conflicts of interests, lending policies, interest charges, and the risks associated with margin investing enabled accounts.

Robinhood Financial LLC (member SIPC) is a registered broker-dealer. Robinhood Securities, LLC (member SIPC) is a registered broker-dealer and provides brokerage clearing services. Robinhood Crypto, LLC provides cryptocurrency trading. All are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’).

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Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Credit card products are offered by Robinhood Credit, Inc. (“RCT“) (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

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Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

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All investing involves risk.

Brokerage services are offered through Robinhood Financial LLC, (“RHF”) a registered broker-dealer (member SIPC) and clearing services through Robinhood Securities, LLC, (“RHS”) a registered broker dealer (member SIPC). Cryptocurrency services are offered through Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840). The Robinhood Money spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Credit card products are offered by Robinhood Credit, Inc. (“RCT“) (NMLS ID: 1781911 and issued by Coastal Community Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. RHF, RHY, RHC and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC and RHS are not banks. Securities products offered by RHF are not FDIC insured and involve risk, including possible loss of principal. Cryptocurrencies held in RHC accounts are not covered by FDIC or SIPC protections and are not regulated by FINRA. RHY products are not subject to SIPC coverage but funds held in the Robinhood Money spending account and Robinhood Cash Card account may be eligible for FDIC pass-through insurance (review the Robinhood Cash Card Agreement and the Robinhood Spending Account Agreement).

Options trading entails significant risk and is not appropriate for all customers. Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

Commission-free trading of stocks, ETFs and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities and certain OTC securities electronically. Keep in mind, other fees such as trading (non-commission) fees, Gold subscription fees, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Robinhood Financial's Fee Schedule to learn more.

© 2024 Robinhood. All rights reserved.