Is a Margin Call a Sign of Realized or Unrealized Loss?
A margin call is a sign of an unrealized loss that has occurred due to the adverse price movement of the futures contract. The loss is only realized when the position is closed.
However, the variation margin that is debited daily is a realized cash flow, even if the overall position is still open. The margin call forces the covering of this unrealized loss.
Glossar
Unrealized Gain
Valuation ⎊ An unrealized gain represents the profit on an asset, such as a cryptocurrency holding, an options contract, or a financial derivative, that has not yet been realized through a sale or exercise.
Variation Margin
Collateral ⎊ Variation Margin represents a dynamic adjustment to posted collateral requirements in cryptocurrency derivatives markets, reflecting real-time mark-to-market losses on open positions.
Adverse Price Movement
Exposure ⎊ Adverse price movement within cryptocurrency derivatives represents a deviation from anticipated directional forecasts, impacting portfolio valuations and risk parameters.
Unrealized Loss
Position ⎊ This represents the theoretical loss that would be realized if all open derivative or spot positions were closed immediately at the current market price, before any offsetting actions are taken.
Margin Call
Trigger ⎊ A margin call in cryptocurrency, options, and derivatives markets represents a broker’s demand for additional funds to bring an account back to the minimum required margin.