Re: [Slate] Insane in the Brain: Priceline.com

Dave Long (dl@silcom.com)
Tue, 06 Apr 1999 22:44:28 -0700


> margins are granted only to the worthy (solvent) and even then at
> a conservative rate. Higher risks are not margined at all by some brokerages
> or at a higher rate (90%) by others.

The definition of solvent must admit of a pretty low activity; my own accounts
attest to needing nowhere near Reg D qualifications to open a margin account.

Having failed to find anything coherent at the Federal Reserve Board site, I
consulted my (perhaps dated) account handbooks. In order to get to the 90%
range, it looked like one had to be playing with options. Generally,
requirements for equities were only 50% initially, which could decline to 30%
before a maintenance call. Bonds could be had at 75% (4:1 leverage) and
maintained for as little as 10% of principal. Various other instruments were
available at 10:1 leverage, and for those with the desire to wring some action
out of those boring T-bills, $10K sufficed to establish a million dollar
position.

-Dave

Is one who believes that markets may be in Brownian motion an ecclesiastic?