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If you own stock in a margin account right now and the stock keeps falling, the shorter keeps getting more strength from you each time you have to sell to meet your margin. This is a double whammy for the shorter, not only is he able to borrow your margin shares, he is also supplimented by you having to sell to cover the margin.
Margin Account
What Does Margin Account Mean?
A brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. If the value of the stock drops sufficiently, the account holder will be required to deposit more cash or sell a portion of the stock.
A brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. If the value of the stock drops sufficiently, the account holder will be required to deposit more cash or sell a portion of the stock.
Investopedia explains Margin Account
In a margin account, you are investing with your broker's money. By using leverage in such a way, you magnify both gains and losses.
In a margin account, you are investing with your broker's money. By using leverage in such a way, you magnify both gains and losses.
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