How Is the Maintenance Margin Typically Calculated for a Futures Contract?

The maintenance margin is usually calculated as a percentage of the notional value of the position, or as a percentage of the initial margin, and often increases as the position size grows (tiered margin system). For example, it might be 0.5% of the notional value.

This percentage is set by the exchange and is crucial for determining the liquidation price. It ensures a small buffer remains after liquidation to cover fees and potential market slippage.