Derivatives foundations · Lesson 1 of 3
Margin and margin modes
Initial and maintenance margin, and how modes allocate collateral.
8 minute read
Collateral and its rules
Margin is the collateral required to open and keep a derivatives position. Initial margin is needed to open it; maintenance margin is the minimum needed to keep it open.
Cross and isolated margin allocate collateral differently, and the venue's rules determine how losses and fees affect available margin. Always read the specific contract's terms before trading it.
Key takeaway
Use these concepts to understand the market, not to assume a particular outcome. Always define uncertainty and risk before making a decision.