Here is the situation:
I had $8,000 in my Scottrade account.
I had an additional $8,000 in margin
I bought 2,000 shares at $8 (1,000 with my own money and 1,000 on margin) for a total of 2,000 shares at $8 for a total of $16,000.
Here are recent closings of my stock:
Monday: Market Closed for President’s Day
During the week I noticed my first maintenance call for $1,840.99 and so I added $2,000 in new funds to cover it.
Then later another for $1,752.99 and I again added $2,000 to cover it. So I added $4,000 last week to cover the margin calls.
However, on Friday when it closed below $5 it asked for a maintenance call of $4,861?
(1) Is this excluding the $4,000 I already added or do I only need to add $861 since I already added 4K?
(2) What is the maximum I will have to add to my account to cover a worst case scenario so that I can keep my 2,000 shares without Scottrade automatically selling some of them to cover the call? I borrowed $8,000 so I am guessing the maximum I would have to add would be around $8,000 + interest, and I looked up the interest and know that it is either 7.75% or 7.5%.
(3) Assuming that the $4,861 is a new margin call, excluding the $4,000 I already added, for a grand total of $8,861…..Isn’t this too high since I only borrowed $8,000? I am unsure but have all but concluded that since my stock dropped under $5, I now have to cover 100% or the entire margin call, but still, why would it be $8,861?
Some additional information:
The lady at Scottrade told me 65% was what I needed to maintain. She also told me I wouldn’t get a margin call unless it dropped under $5 and I got a margin call 2 times when it was above $5 so she obviously was misinformed.
Finally, looking back, there wasn’t much I could have done to prevent this situation. I bought in at $8 on Friday. It opened around $7.25 on Tuesday and I was waiting/hoping for a bounce: it ended up closing at $6 on Tuesday at which point I was set on being in it for the long haul (who would have sold for a 25% – one day loss and not just wait it out?)
Thanks a lot for answering my questions, I appreciate it.