Trading with the Dynamic margin: How it works
Last Update March 29, 2017
The dynamic Margin offered by Directa allows:
1. to make purchases by utilizing only a margin, instead of the entire transaction value (long Trades);
2. To sell securities that you don't own yet, that's Short selling', by repurchasing them late
3. To take advantage of a percentage of the trade value of the securities in portfolio as an additional available liquidity that can be used to both purchase other shares and Covered Warrant, or either used as margin for short sales.
Before being able to carry out operations, the customer will have to make his choice between the
intraday, which expects the closing/coverage of all the leverage using operations by the end of the day, and the Overnight Dynamic margin, which allows you to keep positions for several days by using a loan provided by Directa: in money, in case of purchases, or in securities in case of short sales.
Another option that can be combined with either of the options is represented by the turbo margin, which allows you to operate with halved margins on a selection of securities which, however, has a validity of only intraday, and to be more precise, that begins from the opening of the trading session '' 'up untill 17.30, also for those who have the overnight option enabled as well.
In order to Illustrate better the dynamics of this type of leverage, let's suppose we are trading the Generali insurance group shares, which has a margin requirement of 20%, let's consider two cases in our trading operations ( and for simplicity sake here, we are not taking into account neither the commissions, nor the capital gain withholding tax):
Case 1) the cash amount in the account is 10.000 euros, but the dynamic margin makes them enough to buy Generali shares for a value of 50,000 Euros. The funding used will then have to be returned, for instance by selling Generali shares, but also any other securities will do it , for a value of 40,000 Euros.
case 2) In the portfolio, there are Generali shares for an equivalent trade value of 10,000 Euros: because of the dynamic leverage effect, the availability increases by a virtual amount of 8,000 euros, equal to 80% of the trade value; now, with 8,000 euros, 40,000 Euros worth of Generali shares can be bought, here is that it becomes possible incrementere the portfolio up to 50,000 euro of securities, just like the previous case.
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A brief outline of the subject matter can be found on page 302.