A demand to add more cash or sell assets fast, after a leveraged bet starts losing money.
When an investor borrows money to make a bigger bet than their own cash would allow, using leverage, the lender requires a minimum amount of the investor's own money to stay in the account as a cushion. If losses eat into that cushion too far, the lender issues a margin call, demanding more cash immediately or forcing a sale of assets to cover the gap. Margin calls can cascade: a forced sale pushes prices down further, which can trigger the next investor's margin call, which is part of why leveraged selloffs can accelerate so fast once they start.
Part of the Open Bell Glossary — plain-English explanations of the terms that come up on the show. Browse every term.