Margin Loans

How margin works.

The margin feature on your Schwab brokerage account allows you to access your available margin cash by placing a trade or withdrawing cash. Higher balances may be eligible for lower interest rates.

How much can you borrow?

The amount you can borrow depends upon the type and value of securities in your account.

• To begin borrowing at Schwab, you must have at least $5,000 in cash or marginable securities¹ in your account.
• The amount of money you can borrow on margin toward the purchase of securities is typically limited to 50 percent of the value of marginable securities in your account. However, it is prudent to borrow less to minimize risk.
• Once you borrow on margin, you are required to maintain a certain amount of equity in your account, depending on the securities you hold. Typically, the equity maintenance requirement is at least 30% of the total account value, but it can be higher for certain securities or accounts.
• Schwab calculates your buying power and cash available for withdrawal and provides the information with your Schwab brokerage account.

Margin borrowing is not for everyone. Make sure you understand the benefits and risks, which you can find in the tabs above.

Margin Interest Rates

Enjoy the benefits of a margin loan from Schwab.

With a margin loan from Schwab, you can:

• Buy more securities than you could on a cash-only basis.
• Take advantage of timely market opportunities or make investment changes when you want.
• Defer any capital gains taxes that might result from selling securities to meet your financing needs.
• Repay the loan at your own pace, as long as you maintain the required level of equity in your account.
• Enjoy a cost-effective borrowing option with competitive rates.
• Possibly deduct the interest against your net investment income. (Please consult your tax advisor.)

The risks of margin borrowing.

Margin borrowing may not be right for everyone. It’s important that you fully understand your financial situation, the rules of margin borrowing, and conditions that may affect your investments.

• Margin borrowing increases your level of market risk, so the value of your investments can go down as well as up.
• You must repay your margin loan, regardless of the underlying value of the securities you purchased.
• Schwab can change its maintenance margin requirements at any time without prior notice.
• If the equity in your account falls below the minimum maintenance requirements (30% for most securities), you’ll have to deposit additional cash or acceptable collateral.
• If you fail to meet your minimums, Schwab may be forced to sell some or all of your securities, with or without your prior approval.

 Before you begin using margin, you should read Schwab’s Margin Borrowing Overview and Disclosure Statement.

How to manage your risk.

Schwab encourages you to use margin prudently. You may wish to consider the following ways to reduce the risk of a margin maintenance call, which occurs when your account equity falls below the required amount.

• Borrow against a diversified portfolio of low-volatility securities.² This reduces the risk that a single security will drop in value and trigger a margin call.
• Borrow less than the maximum amount allowable in your account. Consider setting your own personal maintenance level.
• Monitor your portfolio, especially during uncertain market conditions, to anticipate a potential decline in value.

Listed below are combined requirements for buying and borrowing against securities in a margin account based on Federal Reserve Board Regulation T (“Reg T”), FINRA regulations, and Schwab rules.

Equities

Security Type	Initial Min Equity Req.	Schwab Initial Req.	Schwab Maintenance Req.
Long: All Equity
Common Stock
≥  $3.00 per share	Lesser of $5,000 or 100% market value	50% of cost	30% of market value
< $3.00 per share	100% market value	100% of cost	100% of market value
Preferred Stock
≥  $3.00 per share	Lesser of $5,000 or 100% market value	50% of cost	30% of market value
<  $3.00 per share	100% market value	100% of cost	100% of market value
Warrants
≥ $3.00 per share	Lesser of $5,000 or 100% market value	50% of cost	30% of market value
< $3.00 per share	100% market value	100% of cost	100% of market value
Short Sale: All Equity
> $16.66	$5,000	50% net proceeds	30% short market value
$5.00 - $16.66	$5,000	50% net proceeds	$5 per share
$2.50 - $4.99	$5,000	50% net proceeds	100% short market value
< $2.50	$5,000	50% net proceeds	$2.50 per share
Other Equity Types/Positions
Mutual Funds1	$5,000 or 100% market value, whichever is less	50% of cost	30% of market value
Boxed Positions	$5,000	10% of market value	10% of market value
Exchange Traded Funds (ETF): Long
Non-Leveraged ETFs1	Lesser of $5,000 or 100% market value	50% of cost	30% of market value
2X Leveraged ETFs	Lesser of $5,000 or 100% market value	50% of cost	50% of market value
3X Leveraged ETFs	Lesser of $5,000 or 100% market value	75% of cost	75% of market value
Exchange Traded Funds: Short
Non-Leveraged ETFs	$5,000	50% of net proceeds	30% short market value
2X Leveraged ETFs
> $8.33/share	$5,000	60% of net proceeds	60% short market value
$5.00 - $8.33/share	$5,000	$5.00/share	$5.00/share
$2.50 - $4.99/share	$5,000	100%	100%
< $2.50/share	$5,000	$2.50/share	$2.50/share
3X Leveraged ETFs
> $5.55/share	$5,000	90% of net proceeds	90% short market value
$5.00 - $5.55/share	$5,000	$5.00/share	$5.00/share
$2.50 - $4.99/share	$5,000	100%	100%
< $2.50/share	$5,000	$2.50/share	$2.50/share

1. Mutual Funds and Third-party ETFs participating in Schwab ETF OneSource™ are not marginable until 30 days after the purchase settles (100% initial requirement).

Exchange Traded Funds are subject to risks similar to those of stocks. Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF.

Options

Security Type	Initial Min Equity Req.	Schwab Initial Req.	Schwab Maintenance Req.
Options - Long
Equity Option (including LEAPS, ETFs, & ETNs)	Lesser of $5,000 or 100% market value	100% of cost	Same as Initial Requirement
Foreign Currency Option	Lesser of $5,000 or 100% market value	100% of cost	Same as Initial Requirement
Broad-based & Narrow-based Options	Lesser of $5,000 or 100% market value	100% of cost	Same as Initial Requirement
Equity Options - Uncovered
	Calls: $25,000	Greater of: 25% underlying value - out of the money amount + premium 10% underlying value + premium Minimum $100 per contract	Greater of minimum equity requirement or initial requirement
	Puts: Lesser of $25,000 or max loss	Greater of: 25% underlying value - out of the money amount + premium 10% strike price + premium Lesser of $100 per contract or max loss
Index, ETF, & ETN Options - Uncovered
Broad based - No Leverage	Calls: $25,000	Greater of: 20% underlying value - out of the money amount + premium 10% underlying value + premium Minimum $100 per contract	Greater of minimum equity requirement or initial requirement
	Puts: Lesser of $25,000 or max loss	Greater of: 20% underlying value - out of the money amount + premium 10% strike price + premium Lesser of $100 per contract or max loss
Broad Based – 2X Leverage	Calls: $25,000	Greater of: 30% underlying value - out of the money amount + premium 20% underlying value + premium Minimum $100 per contract	Greater of minimum equity requirement or initial requirement
	Puts: Lesser of $25,000 or max loss	Greater of: 30% underlying value - out of the money amount + premium 20% strike price + premium Lesser of $100 per contract or max loss
Broad Based – 3X Leverage	Calls: $25,000	Greater of: 45% underlying value - out of the money amount + premium 30% underlying value + premium Minimum $100 per contract	Greater of minimum equity requirement or initial requirement
	Puts: Lesser of $25,000 or max loss	Greater of: 45% underlying value - out of the money amount + premium 30% strike price + premium Lesser of $100 per contract or max loss
Narrow based - No Leverage	Calls: $25,000	Greater of: 25% underlying value - out of the money amount + premium 10% underlying value + premium Minimum $100 per contract	Greater of minimum equity requirement or initial requirement
	Puts: Lesser of $25,000 or max loss	Greater of: 25% underlying value - out of the money amount + premium 10% strike price + premium Lesser of $100 per contract or max loss
Narrow based - 2X Leverage	Calls: $25,000	Greater of: 40% underlying value - out of the money amount + premium 20% underlying value + premium Minimum $100 per contract	Greater of minimum equity requirement or initial requirement
	Puts: Lesser of $25,000 or max loss	Greater of: 40% underlying value - out of the money amount + premium 20% strike price + premium Lesser of $100 per contract or max loss
Narrow based - 3X Leverage	Calls: $25,000	Greater of: 60% underlying value - out of the money amount + premium 30% underlying value + premium Minimum $100 per contract	Greater of minimum equity requirement or initial requirement
	Puts: Lesser of $25,000 or max loss	Greater of: 60% underlying value - out of the money amount + premium 30% strike price + premium Lesser of $100 per contract or max loss
Spreads, Straddles, & Combos
Spreads	$5,000	Credit Spread: Difference in strike prices x 100 x number of contracts Debit Spread: 100% of cost	Greater of minimum equity requirement or initial requirement
Short Straddle	$25,000	Uncovered requirement for the leg with the higher uncovered requirement, plus the premium of the other leg	Greater of minimum equity requirement or initial requirement
Long Straddle	Lesser of $5,000 or 100% market value	100% of cost	Same as Initial Requirement
Short Combo	$25,000	Uncovered requirement for the leg with the higher uncovered requirement, plus the premium of the other leg	Greater of minimum equity requirement or initial requirement
Long Combo	Lesser of $5,000 or 100% market value	100% of cost	Same as Initial Requirement
Long Butterfly	$5,000	100% of cost	Greater of minimum equity requirement or initial requirement
Long Condor	$5,000	100% of cost	Greater of minimum equity requirement or initial requirement
Short Iron Butterfly	$5,000	The amount of the aggregate equidistant difference between the exercise prices.	Greater of minimum equity requirement or initial requirement
Short Iron Condor	$5,000	The amount of the aggregate equidistant difference between the exercise prices.	Greater of minimum equity requirement or initial requirement
Short Box Spread	$5,000	The amount of the aggregate equidistant difference between the exercise prices.	Greater of minimum equity requirement or initial requirement

1. Subject to change at any time by Schwab. To protect itself, Schwab may, at its discretion and without prior notice to you, revalue securities, reset requirements or adjust the inflated SMA (Special Memorandum Account) at any time.
2. Schwab retains complete discretion to determine how to pair options that may constitute a qualified spread. See "Qualified Spreads" below.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. With long options, investors may lose 100% of funds invested. Multiple leg options strategies will involve multiple commissions. Spread trading must be done in a margin account. Writing uncovered options involves potentially unlimited risk. Please read the options disclosure document titled Characteristics and Risks of Standardized Options before considering any option transaction.

Qualified Spreads
With a Qualified Spread, the purchased option is required to expire on the same or later expiration date than the option sold. When there is more than one possible way to pair available options in your Account, Schwab has the discretion to determine spread pairings. Schwab may pair options in a manner that does not produce the lowest possible margin requirements.

Debt

Security Type	Initial Min Equity Req.	Schwab Initial Req.	Schwab Maintenance Req.
Corporate Bond
Corporate Bond  Coupon	Lesser of $5,000 or 100% market value	30% of cost	Greater of 30% market value or 20% of principal, not to exceed 100% market value
Corporate Bond Convertible	Lesser of $5,000 or 100% market value	50% of cost	Greater of 30% market value or 20% of principal, not to exceed 100% market value
Corporate Bond  Non-Convertible	Lesser of $5,000 or 100% market value	30% of cost	Greater of 30% market value or 20% of principal, not to exceed 100% market value
Government Agency
Government Agency  Coupon	Lesser of $5,000 or 100% market value	20% of cost	Greater of 20% market value or 15% of principal, not to exceed 100% market value
Government Agency  Strip	Lesser of $5,000 or 100% market value	20% of cost	Greater of 20% market value or 15% of principal, not to exceed 100% market value
Government Agency Pass-through	Lesser of $5,000 or 100% market value	20% of cost	Greater of 20% market value or 15% of principal, not to exceed 100% market value
Government Agency  CMO	Lesser of $5,000 or 100% market value	20% of cost	Greater of 20% market value or 15% of principal, not to exceed 100% market value
Municipal Bond
Municipal Bond  Coupon	Lesser of $5,000 or 100% market value	25% of cost	Greater of 25% market value or 15% of principal, not to exceed 100% market value
Treasury
Treasury Bill	Lesser of $5,000 or 100% market value	10% of cost	4% market value
Treasury  Coupon	Lesser of $5,000 or 100% market value	10% of cost	Mat < 2 yrs: 4% market value 2 ≤ Mat < 5 yrs: 6% market value 5 ≤ Mat < 10 yrs: 8% market value Mat > 10 yrs: 10% market value
Treasury STRIP	$5000 or 100% market value, whichever is less	Lesser of 10% of face value or 100% market value	Lesser of 10% of face value or 100% market value
Unit Investment Trust  (Trust Fixed Group)	Not Marginable	Not Marginable	Not Marginable

Fixed-income investments are subject to various risks including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. For further details, please feel free to contact a Schwab Fixed Income Specialist at 877-563-7818.