With an LVR of say 40%, as in your subsequent example, the margin call would happen at 40% of the original parcel price (or perhaps 45% to cover the loan plus a buffer of say 5%), meaning a call at $1.50 would be made on a purchase price of $3.75 or 75c in the old money. But it didn't get there... So with your example of a 40% LVR, even someone who bought in at $3 wouldn't get called until $1.20 (perhaps slightly higher with a buffer). A buy in at $2.50 wouldn't be called until $1. Plus, they could top up with extra funds to fend off the margin call if they wanted to still hold and avoid the call.
So, even with your own example numbers (40% LVR), saying "tomorrow could be quite dangerous because those on margins will be forced to sell" doesn't really make sense!?
Unless you know of any lenders offering higher than 40% LVR on GXY? Please share if you do, I might just call them up and enquire about a loan.
GXY Price at posting:
$1.55 Sentiment: Buy Disclosure: Held
