Portfolio Margin Explained

May 24, 2024 Advanced
Introducing the benefits and risks of Portfolio Margin as compared to Regulation T.
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The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk, including loss of principal.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction. Call Schwab at 1-800-435-4000 for a current copy. Supporting documentation for any claims or statistical information is available upon request.

​Uncovered options strategies are only appropriate for traders with the highest risk tolerance, may involve potential for unlimited risk, and are only allowed in margin accounts.

Spread trading must be done in a margin account.

Multiple leg options strategies will involve multiple transaction costs.

​Use of portfolio margin involves unique and significant risks, including increased leverage, which increases the amount of potential loss, and shortened and stricter time frames for meeting deficiencies, which increase the risk of involuntary liquidation. Client, account, and position eligibility requirements exist, and approval is not guaranteed. Carefully read the Charles Schwab & Co. Guide to Margin and the Charles Schwab & Co.  Margin Overview and Disclosure Statement for specific disclosures and more details. Charles Schwab & Co. Guide to Margin: https://www.schwab.com/resource/charles-schwab-guide-to-margin

Charles Schwab & Co.  Margin Overview and Disclosure Statement: https://www.schwab.wallst.com/pdf/activetrader/marginriskdisclosure.pdf

It is the client’s obligation to evaluate the risks of portfolio margin when making investment decisions. Charles Schwab & Co. (Schwab) reserves the right at its sole discretion to decline a client the use of portfolio margin.  In the event Schwab decides to terminate a client’s use of portfolio margin, the client’s account may be converted to the standard margin account.  The conversion of a portfolio margin account to a margin account may require the liquidation of positions.

The paperMoney® software application is provided for educational purposes only, and allows users to engage in simulated trading with hypothetical funds using live market data. Market activity, trade executions, transaction costs, and other elements presented in paperMoney are simulations only. Simulated performance does not ensure success in a live environment.