What is a Concentrated Maintenance Call? | Robinhood

What is a Concentrated Maintenance Call?

A Concentrated Maintenance (CM) call is a type of margin maintenance call and happens when your brokerage portfolio value drops lower than your margin maintenance requirement and you’re in a concentrated position.

Being concentrated means you hold at least 70% of your brokerage portfolio in a single security. When this happens, the maintenance requirement for the security you're concentrated in may be increased.

While your investing 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 close positions to return your account to good standing. If you’re unable to deposit or close positions 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 YOWL. If the total market value of your YOWL shares is $1,000,000, your brokerage portfolio value would be $350,000. If YOWL’s margin maintenance increased to 40% because of being concentrated, it’d result in a concentrated maintenance call of $50,000. The call would cover the difference between the brokerage portfolio value of $350,000 and the maintenance requirement of $400,000.

Tips to meet your CM call:

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

Sell non-marginable securities: In the previous example, you can sell $50,000 in 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.

Sell marginable securities: In the previous example, you can sell marginable securities to cover the call. Marginable securities have a maintenance requirement less than 100%, meaning that you won’t get the full dollar value of your sales applied to your CM call. 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

Disclosures

Any examples provided are for illustrative purposes only. All investments involve risk and loss of principal is possible. Margin trading involves interest charges and risks, including the potential to lose more than any amounts 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, review Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures have information about Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

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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 an account with Robinhood Crypto, LLC (“RHC”) (NMLS ID: 1702840).Robinhood Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Please review a list of RHC's licenses for more information. Cryptocurrency held through Robinhood Crypto is not FDIC insured or SIPC protected.

The Robinhood spending account is offered through Robinhood Money, LLC (“RHY”) (NMLS ID: 1990968), a licensed money transmitter. Please review a list of our licenses for more information.

The Robinhood Cash Card is a prepaid card issued by Sutton Bank, Member FDIC, pursuant to a license from Mastercard® International Incorporated. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.

Robinhood Gold Card is subject to credit approval and underwriting. Robinhood Gold Card is offered by Robinhood Credit, Inc., and is issued by Coastal Community Bank, pursuant to a license from Visa U.S.A. Inc. Robinhood Credit, Inc. (“RCT”), is a financial technology company, not a bank.

Robinhood Gold is a subscription-based membership program of premium services offered through Robinhood Gold, LLC (“RHG”).

RHF, RHY, RHC, RCT, RHG, and RHS are affiliated entities and wholly owned subsidiaries of Robinhood Markets, Inc. RHF, RHY, RHC, RCT, RHG, and RHS are not banks. Investing products offered by RHF are not FDIC insured and involve risk, including possible loss of principal.

RHY is not a member of FINRA, and products are not subject to SIPC protection, but funds held in the Robinhood 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.

The risk of loss in trading futures can be substantial. Carefully consider if it’s appropriate for you in light of your financial circumstances. Please read the Futures Risk Disclosure Statement prior to trading futures products. Futures accounts are not protected by the Securities Investor Protection Corporation (SIPC) and are not Federal Deposit Insurance Corporation (FDIC) insured. Prior to trading virtual currency Futures products, please review the NFA Investor Advisory & CFTC Advisory providing more information on these potentially significant risks. Futures trading and options on futures trading are offered by Robinhood Derivatives, LLC (“RHD”), a registered futures commission merchant with the Commodity Futures Trading Commission (CFTC) and Member of National Futures Association (NFA) (NFA ID 0424278).

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