The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be going through our ultimate quick guide to margin buying. When we talk about margin buying, we’re specifically referring to buying stocks on margin with your brokers and obviously, this requires a margin account to do this. You can’t do this in an IRA or a retirement account. But all margin buying is and it should really be renamed as just borrowing with a loan to purchase stocks and it's all it is. You are actually using a loan to thereby, increase the capacity in which you have to purchase stocks. Now, obviously, this comes at a cost and so, margin rates can be pretty high in some cases for many brokers, but brokers do allow you to purchase stock by borrowing funds from the brokerage to increase your trading capacity. For example, if you have a $10,000 account, you could purchase obviously $10,000 worth of stock because you have $10,000 in cash, but in many cases, the broker will give you basi