How Does the Margin Requirement Typically Differ between Physically and Cash-Settled Contracts?

Margin requirements are often higher for physically-settled contracts, especially as the settlement date approaches. This is because the clearing house needs greater assurance that the trader can deliver or take delivery of the full value of the underlying asset, not just cover potential price fluctuations.

Cash-settled contracts usually only require margin sufficient to cover the maximum expected change in the contract's value.