NDAQ - Margin debt hits new record a warning for stock volatility ahead?

Investors borrowed a record $722.1B against their investment portfolios through November, according to the Financial Industry Regulatory Authority, exceeding the previous high of $668.9B from May 2018.The milestone is worrying for the stock market because margin debt highs tend to precede periods of volatility as experienced in 2000 and 2008.Investors using margin debt pledge their securities as collateral for loans from brokerage firms so they can make more investments. But if the value of their collateral falls below a certain level, they need to either put up more money or sell the securities underlying the loan.Many investors are using their margin balances to trade options, contracts that gives them the right to either buy or sell shares at a pre-determined price later, the Wall Street Journal reports. Options trading surged this year as individual investors flooded into the stock market. An average of 29M traded this year, up 48% vs.

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Margin debt hits new record, a warning for stock volatility ahead?