7.2.1.3. Combined Positions in Margin Accounts
A combined account is an account that contains both long and short positions in it. To calculate the combined equity within the account, calculate the equity of both the long and short positions and add them together.
Example: Combined account.
John Robert’s account contains the following:
LMV = $65,000
SMV = $20,000
Debit balance = $40,000
Credit balance = $35,000
To find the account’s equity, start by using the relevant equations:
|
LMV |
– |
debit balance |
= |
equity |
|
$65,000 |
– |
$40,000 |
= |
$25,000 |
|
credit balance |
– |
SMV |
= |
equity |
|
$35,000 |
– |
$20,000 |
= |
$15,000 |
|
long equity |
+ |
short equity |
= |
combined equity |
|
$25,000 |
+ |
$15,000 |
= |
$40,000 |
Note that the long and short