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Margin trading basics

Margin lending allows you to borrow against the value of securities you own to help fund your financial goals. Some ways to use margin could include:
  • Purchasing additional securities
  • Selling securities short
  • Accessing a line of credit for other financial needs
Margin is an extension of credit, using marginable securities held as collateral
  • Interest is charged on the money you borrow and based on the amount you borrow
  • There is no set repayment schedule, but you must maintain a required equity level in your account
  • You can repay the loan at any time by depositing cash or selling securities

Cash vs. Margin

What factors might you consider when deciding if margin is for you? We've summarized a few in this table, and you can find more details in the Merrill Edge Margin Handbook (PDF)
  Cash account Margin account
Can I borrow using the securities I own in my account? No Yes
How much do I need to get started with margin? Not applicable $2,000
Is there a minimum balance to maintain? No YesFootnote *
Do I have to pay interest? Not applicable Applicable
May I use the account for short selling? Not permitted Permitted
How much am I able to withdraw? Available cash Available cash + available loan value
Footnote *Net account value must remain above $2,000 while a margin loan is outstanding. Higher minimum requirements may apply for specific investing strategies.

Potential gains and losses with margin lending

Margin can potentially enhance your profits — or it can magnify your losses. Observe this in action with our interactive margin illustrator. In this example, start out with a $50 stock and see what could happen as stock prices change.
You purchase 200 shares of a $50 stock for a total investment of $10,000
You borrow $5,000
on margin
You invest $5,000
of your own money
Current market value:
Your total stock value: $10,000
PROFIT/LOSS
$0Footnotes 1,2
OR WITHOUT MARGIN:
If you invest only $5,000 of your own money and $0 on margin
Your total stock value: $5,000
$0Footnotes 1,2
Footnote 1 After paying back borrowed funds
Footnote 2 Interest charges, commissions and fees not included
Select to expand Review our margin rates
For a detailed understanding of what margin is and how it works, download the margin handbook (PDF).
Open a new account and add margin
Add margin to an existing account
Need help?
Contact us at
855.332.5920
Options involve risk and are not suitable for all investors. Certain requirements must be met to trade options. Before engaging in the purchase or sale of options, investors should understand the nature of and extent of their rights and obligations and be aware of the risks involved in investing with options. Prior to buying or selling an option, clients must receive the options disclosure document "Characteristics and Risks of Standardized Options." Call the Investment Center at 1.877.653.4732 for a copy. A separate client agreement is needed.

When you purchase securities, you may pay for the securities in full, or if your account has been established as a margin account with the margin lending program, you may borrow part of the purchase price from Merrill. If you choose to borrow funds for your purchase, Merrill's collateral for the loan will be the securities purchased, other assets in your margin account, and your assets in any other accounts at Merrill. If the securities in your margin account decline in value, so does the value of the collateral supporting your loan, and, as a result, we can take action, such as to issue a margin call and/or sell securities in any of your accounts held with us, in order to maintain the required equity in your account. If your account has a Visa® card and/or checks, you may also create a margin debit if your withdrawals (by Visa card, checks, preauthorized debits, FTS or other transfers) exceed the sum of any available free credit balances plus available money account balances (such as bank deposit balances or money market funds). Please refer to your account documents for more information.

Before opening a margin account, you should carefully review the terms governing margin loans. For Individual Investor Accounts, these terms are contained in the Margin Lending Program Client Agreement. For all other accounts, the terms are in your account agreement and disclosures. It is important that you fully understand the risks involved in using margin. These risks include the following:

  • You can lose more funds than you deposit in the margin account. A decline in the value of securities that are bought on margin may require you to provide additional funds to us to avoid the forced sale of those securities or other securities in your account(s).
  • We can force the sale of securities in your account(s). If the equity in your account falls below the maintenance margin requirements or Merrill Lynch's higher "house" requirements, we can sell the securities in any of your accounts held by us to cover the margin deficiency. You also will be responsible for any shortfall in the account after such as sale.
  • We can sell your securities without contacting you. Some investors mistakenly believe that they must be contacted for a margin call to be valid, and that securities in their accounts cannot be liquidated to meet the call unless they are contacted first. This is not the case. We will attempt to notify you of margin calls, but we are not required to do so. Even if we have contacted you and provided a specific date by which you can meet a margin call, we can still take necessary steps to protect our financial interests, including immediately selling the securities without notice to you.
  • You are not entitled to choose which securities in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, we have the right to decide which security to sell in order to protect our interests.
  • We can increase our "house" maintenance margin requirements at any time and are not required to provide you advance written notice. These changes in our policy may take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause us to liquidate or sell securities in your account(s).
  • You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to you under certain conditions, you don't have a right to the extension.
If you have any questions or concerns about margin and the margin lending program, please contact the Merrill Edge Investment Center at 855.332.5920855.332.5920

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Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.
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