As Used For Exchange-traded Products
When used in the context of exchange traded products such as stocks, options, or futures, haircut is used interchangeably with the term margin. It is the amount of capital required by a broker to maintain the positions currently in a trading account. If haircut exceeds the account's capital, the broker can either require additional capital (e.g., margin call), or liquidate positions until the haircut no longer exceeds available capital.
Read more about this topic: Haircut (finance)
Famous quotes containing the word products:
“All that is told of the sea has a fabulous sound to an inhabitant of the land, and all its products have a certain fabulous quality, as if they belonged to another planet, from seaweed to a sailor’s yarn, or a fish story. In this element the animal and vegetable kingdoms meet and are strangely mingled.”
—Henry David Thoreau (1817–1862)