# What Happens to the Initial Margin When a Futures Contract Is Closed? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## What Happens to the Initial Margin When a Futures Contract Is Closed?

When a futures contract is closed, the initial margin is released back to the trader's available balance. If the contract was closed at a profit, the margin plus the profit is returned.

If closed at a loss, the loss is deducted from the margin, and the remainder is returned. The initial margin itself is not a cost, but collateral.

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## Glossar

### [Initial Margin](https://learn.greeks.live/area/initial-margin/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Collateral ⎊ Initial margin represents the equity a trader must deposit with a broker or exchange as a good faith commitment to cover potential losses arising from derivative positions, notably within cryptocurrency markets.

### [Futures Contract](https://learn.greeks.live/area/futures-contract/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Leverage ⎊ Futures contracts in cryptocurrency represent agreements to buy or sell an underlying asset at a predetermined price on a future date, functioning as a derivative instrument that allows for amplified exposure without immediate asset ownership.

## Discover More

### [What Happens If the Price of the Commodity Moves in the Hedger's Favor?](https://learn.greeks.live/path/what-happens-if-the-price-of-the-commodity-moves-in-the-hedgers-favor/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Happens If the Price of the Commodity Moves in the Hedger's Favor?](https://learn.greeks.live/wp-content/uploads/2025/10/Dual-Lens-Digital-Sensor-Array-Representing-Decentralized-Exchange-Liquidity-Provisioning-Mechanisms.webp)

If the price moves favorably, the hedger loses on the derivative but gains on the actual asset, effectively canceling each other out.

### [Can a Physically-Settled Futures Contract Be Closed out before Expiration?](https://learn.greeks.live/path/can-a-physically-settled-futures-contract-be-closed-out-before-expiration/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Physically-Settled Futures Contract Be Closed out before Expiration?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetric-Hedging-Vector-Geometry-Illustrating-Multi-Legged-Option-Strategy-Implementation-in-Decentralized-Finance.webp)

Yes, by taking an opposite and equal position (offsetting) before the last trading day.

### [Why Is the Maintenance Margin Typically Lower than the Initial Margin?](https://learn.greeks.live/path/why-is-the-maintenance-margin-typically-lower-than-the-initial-margin/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is the Maintenance Margin Typically Lower than the Initial Margin?](https://learn.greeks.live/wp-content/uploads/2025/10/Cross-Sectional-Overlays-of-Digital-Asset-Bifurcation-Indicating-Implied-Volatility-Surface-Dynamics.webp)

Initial margin is a larger safety buffer; maintenance margin is the lower threshold that triggers a call before the account equity is fully depleted.

### [Why Is Variation Margin Typically Settled in Cash, While Initial Margin Can Be Non-Cash Assets?](https://learn.greeks.live/path/why-is-variation-margin-typically-settled-in-cash-while-initial-margin-can-be-non-cash-assets/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is Variation Margin Typically Settled in Cash, While Initial Margin Can Be Non-Cash Assets?](https://learn.greeks.live/wp-content/uploads/2025/10/Xray-Visualization-of-Bifurcated-Digital-Asset-Settlement-Mechanisms-Leveraging-NonFungible-Token-Call-Options.webp)

VM is cash for immediate, actual P&L settlement; IM can be non-cash as it is a buffer against potential future loss.

### [What Happens If the Guarantee Fund Is Depleted during a Major Default Event?](https://learn.greeks.live/path/what-happens-if-the-guarantee-fund-is-depleted-during-a-major-default-event/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Happens If the Guarantee Fund Is Depleted during a Major Default Event?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetrical-Volatility-Surface-Representation-in-Decentralized-Option-Primitives-Configuration.webp)

Depletion leads to 'assessment rights' for more capital from members; failure beyond that risks CCP resolution and systemic disruption.

### [Define 'Initial Margin' versus 'Maintenance Margin'](https://learn.greeks.live/path/define-initial-margin-versus-maintenance-margin/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define 'Initial Margin' versus 'Maintenance Margin'](https://learn.greeks.live/wp-content/uploads/2025/10/Streamlined-Aerodynamic-Finial-Detailing-Reflecting-Liquidity-Pool-Efficiency-in-Decentralized-Finance.webp)

Initial margin is the deposit to open a position; maintenance margin is the minimum required to keep the position from being liquidated.

### [What Is the Difference between 'Initial Margin' and 'Variation Margin'?](https://learn.greeks.live/path/what-is-the-difference-between-initial-margin-and-variation-margin/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between 'Initial Margin' and 'Variation Margin'?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-Focus-on-Tokenized-Asset-Settlement-Mechanism-Through-Illustrative-Mechanism-Tension.webp)

Initial margin is the collateral to open a position; variation margin is the daily P&L adjustment to the margin account equity.

### [What Is the Role of 'Initial Margin' in Perpetual Swaps?](https://learn.greeks.live/path/what-is-the-role-of-initial-margin-in-perpetual-swaps/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Role of 'Initial Margin' in Perpetual Swaps?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetric-Aperture-Assembly-Modeling-Digital-Asset-Mechanism-Convergence-Parameters-Quantifying-Blockchain-Liquidity-Swaps.webp)

It is the collateral required to open a leveraged position, acting as a performance bond to cover initial potential losses.

### [Define "Initial Margin" and "Maintenance Margin" in the Context of Derivatives Trading](https://learn.greeks.live/path/define-initial-margin-and-maintenance-margin-in-the-context-of-derivatives-trading/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define "Initial Margin" and "Maintenance Margin" in the Context of Derivatives Trading](https://learn.greeks.live/wp-content/uploads/2025/10/Dual-Aperture-System-Simulating-Collateralized-Debt-Positions-In-Digital-Asset-Rehypothecation-Protocols.webp)

Initial margin is the opening collateral deposit; maintenance margin is the minimum required equity to keep the position open.

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