You can buy stocks and options using cash or you can Margin, that is, you can borrow from your broker dealer. This process of borrowing from the broker dealer is called Margin Requirements. You can get a two-to-one leverage on stock trades and a one-to-one leverage on options trades, and will be charged an interest on the money you have borrowed. Usually, this is 3-6%, which is quite higher than the normal interest rate now.

You will effectively be paying much more than normally necessary to the lender, and naturally as the interest rate increases- so will the sum you have to pay. It is always better to avoid borrowing from the broker dealer and always try to pay in cash. It is especially better if you are a novice in the trading business and have only a couple of years of experience, or if you are not an actual trader. Also keep in mind that, if you open and close positions several times during a day, you could get yourself restricted from trading.

Another aspect to be aware of is that the broker dealer might liquidate your position, without prior consent, if your equity drops below 50% or 75% in some cases. This process is called Margin Call and is done in order to bolster their chances of being repaid. So it is most likely that, during market sell-off, the broker dealer will liquidate your position regardless of whether it is profitable or not. All in all Margin Requirements can give you a sense of how much exposure you have to the market in case of a sell-off.