Margin maintenance is the minimum Portfolio Value (minus any cryptocurrency positions) you need to maintain to avoid being issued a maintenance margin call.
Robinhood determines a stock’s maintenance requirement based on a model that considers certain factors, such as volatility and market liquidity. Stocks that are known to be more volatile, for example, typically have higher maintenance requirements to ensure you have enough Portfolio Value to cover the position if it quickly decreases in value. Please note that Robinhood has full discretion to adjust margin maintenance requirements at any time.
If your portfolio value (minus any cryptocurrency positions) falls below the margin maintenance requirement, you may be issued a maintenance margin call. You can resolve a margin call by closing positions or depositing funds into your account.
Say you own $10,000 of MEOW. If Robinhood sets MEOW’s margin maintenance requirement at 25%, this means that you need to have at least $2,500 in account equity backing this investment.
If Robinhood increased MEOW’s margin maintenance requirement to 35%, you would then need to have $3,500 in account equity, because 0.35 x 10,000 = 3,500.
Margin trading 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 Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.