Options Trading Application: Investment Profile
Why do I need to provide this information?
While options trading or margin borrowing can complement your current investing strategy, they are not suitable for all investors. To ensure that options trading or margin borrowing is appropriate for your circumstances, securities regulations require Private Fund Management to take your investment objective, income, net worth and liquid net worth into consideration.
Note: Private Fund Management will not share this information with anyone. If you would like more detail, please review our privacy policy.
Your net worth is the total of value your assets (cars, house, real estate, bank accounts, etc.) minus any outstanding debts (car loans, mortgages, credit cards, etc.) you may have. To calculate your net worth, use the following formula:
Net Worth = Total Assets – Total Debts
Example: John owns a house worth $100,000, a car worth $20,000, and has a bank account with a $5,000 balance; his total assets equal $125,000. John also has $20,000 in credit card debt and still owes $50,000 on his house (mortgage); his total debts would be $70,000. To calculate his net worth, John would subtract his debts ($70,000) from his assets ($125,000), to reach his net worth of $55,000.
How to figure your liquid net worth?
Your liquid net worth is the total of value your liquid assets (cash, bank accounts, stocks, etc.) minus any outstanding short-term debts (credit cards, line of credits, etc.) you may have. Liquid assets are cash or cash equivalents that can be converted to cash in a few days. Short-term debts are debts that need to be paid back within a short period of time (less than one year). To calculate your liquid net worth, use the following formula:
Liquid Net Worth = Total Liquid Assets – Total Short-term Debts
Example: John has a bank account with a $5,000 balance and stocks valued at $10,000; his total liquid assets equal $15,000. John also has $2,000 in credit card debt and owes his contractor $5,000 for house renovations; his total short-term debts would be $7,000. To calculate his net worth, John would subtract his short-term debts ($7,000) from his liquid assets ($15,000), to reach his liquid net worth of $8,000.