# Explaining Maintenance Excess

## How to calculate Maintenance Excess

Maintenance Excess = Cash + Stock Value – Maintenance Requirements

For example, if you deposit \$10,000 into a margin account your maintenance excess would look like this.

Maintenance Excess = 10,000 (cash) + 0 (stock) – 0 (maintenance) = 10,000

After depositing \$10,000, you can buy up to \$20,000 worth of stock with the typical 50%/25% (initial/maintenance) requirement rates. Let’s say you buy \$18,000 worth of XYZ. You would need to spend all \$10,000 in addition to borrowing \$8,000 to make this trade. Your maintenance margin requirements would be \$4,500 (25%).

Maintenance Excess = -8,000 (cash) + 18,000 (stock)4,500 (maintenance) = 5,500

If the stock were to drop in value, your maintenance excess would start to decrease. Let’s say the stock value drops to \$10,000. The new maintenance requirement would be \$2,500 (25%). This would put the account into a \$500 maintenance margin call.

Maintenance Excess = -8,000 (cash) + 10,000 (stock) 2,500 (maintenance) = -500