Margin trading involves borrowing against securities you already own to purchase additional securities. The following example
shows how the same trade works in a cash account vs. margin account.
Cash AccountIf an investor buys a stock for $50 a share and the stock price rises to $60, the profit per share is $10. If the stock price
drops to $40, the loss per share is $10. So the gain or loss is 20%.
Margin Account - GainIf an investor buys stock for $50 a share, he or she pays $25 per share (the initial margin) and borrows $25. If the stock
rises to $60, the profit is still $10 - but it's a 40% gain on the initial investment. Of course, the borrowed $25 per share,
plus interest, needs to be repaid.
Margin Account - LossIf the stock price drops to $40, the loss will be $10 per share plus the cost of the margin loan. In this example, the investor
loses 40% of his or her cash investment and must still pay back the margin loan plus interest.
Industry rules require that investors have at least $2,000 (the minimum margin) in a margin account before purchasing stocks.
Once shares are purchased on margin, the value of the account must not fall below the
maintenance margin.The maintenance margin is 25% of the total market value of the stocks in the account. However, firms can set their own house requirement which may differ from the maintenance margin.
Currently, the house requirement at E*TRADE is 25%. For certain volatile stocks and concentrated positions the house requirement may be higher.
If the equity in the margin account falls below the house requirement of 25%, E*TRADE
will issue a margin call requiring you to deposit more cash. If the margin call is not met in a timely fashion, the firm may liquidate the position
or any security in your account without your permission.
Investing on margin is investing with borrowed money.
You are responsible for repaying the loan plus interest.
The firm can increase its house maintenance margin requirements at any time and is not
required to provide you with advance written notice.
You are not entitled to an extension of time on a margin call.
It's possible to lose more money than you deposited in the account.
Investment Products: • Not FDIC Insured • No Bank Guarantee • May Lose Value
Borrowing on margin isn't for everyone. Before using margin, determine whether this type of trading strategy is right for
you given your specific investment objectives, experience, risk tolerance, and financial situation. For more complete information,
please read the FINRA Margin Disclosure Statement.
E*TRADE credits and offers may be subject to U.S. withholding taxes and reporting at retail value. Taxes related to these
credits and offers are the customer's responsibility.
Offer valid for one new E*TRADE Securities Individual, Joint or Retirement account opened by 12/31/2014 and funded within 60 days of account opening with at least $10,000. Other restrictions may apply.
You will receive up to 500 free trade commissions for each stock or options trade executed within 60 days of the deposited
funds being made available for investment in the new account (excluding options contract fees). You will pay $9.99 for your
first 149 stock or options trades and $7.99 thereafter up to 500 stock or options trades (plus 75¢ per options contract).
Your account will be credited for trades within a week. Account must be funded within 60 days of account open.
Credits for cash or securities will be made based on deposits or transfers of new funds or securities from external accounts
made within 45 days of account open, as follows: $1,000,000 or more will receive $2,500, $500,000 - $999,999 will receive
$1,200; $250,000 - $499,999 will receive $600; $100,000-$249,999 will receive $300; $25,000-$99,999 will receive $200. Your
account will be credited within one week of the close of the 45-day window.
You will not receive cash compensation for any unused free trade commissions. Excludes current E*TRADE Financial Corporation
associates, and non-U.S. residents. This offer is not valid for Unincorporated Organization or E*TRADE Bank accounts. New
funds or securities must remain in the account (minus any trading losses) for a minimum of six months or the credit may be
surrendered. One promotion per customer. E*TRADE Securities reserves the right to terminate this offer at any time. Consult
your tax professional regarding limits on depositing and rolling over qualified assets.
Trading on margin involves risk, including the possible loss of more money than you have deposited. In addition, E*TRADE
Securities can force the sale of any securities in your account without contacting you if your equity falls below required
levels, and you are not entitled to an extension of time in the event of a margin call. For more information, please read the risks of trading on margin at etrade.com/margin.
When trading on margin, an investor borrows a portion of the funds he/she uses to buy stocks to try to take advantage of opportunities
in the market. He/she pays interest on the funds borrowed until the loan is repaid. For each trade made in a margin account,
we use all available cash and sweep funds first and then charge the customer the current margin interest rate on the balance
of the funds required to fill the order. The minimum equity requirement for a margin account is $2,000.
Diversification does not ensure profit or protect against loss in declining markets. Investors should assess their own investment
needs based on their own financial circumstances and investment objectives.
4.Higher Risk Tolerance: Due to the higher leverage offered, Portfolio Margin accounts should only be opened by those investors who have a higher
risk tolerance to support the potential risks associated with this greater leverage ability. Portfolio Margin is available
to Experienced investors with $100,000+ of account equity and Level 4 Options Trading approval. Regular margin accounts do
not include option market value in margin equity. Therefore, trade costs and proceeds directly impact margin equity because
there is no corresponding margin market value to offset the trade costs and proceeds. Trading on margin involves risk, including
the possible loss of more money than you have deposited. In addition, E*TRADE Securities can force the sale of any securities
in your account without contacting you if your equity falls below required levels, and you are not entitled to an extension
of time in the event of a margin call. Please read more information regarding the risks of trading on margin at etrade.com/margin.
The seminars given by E*TRADE Securities are for educational purposes only. This information neither is, nor should be construed,
as an offer, or a solicitation of an offer, to buy or sell securities by E*TRADE Securities. E*TRADE Securities does not offer
or provide any opinion regarding the nature, potential, value, suitability or profitability of any particular investment or
investment strategy, and you shall be fully responsible for any investment decisions you make, and such decisions will be
based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs.