What Is the Difference between Initial Margin and Variation Margin? ⎊ Path

What Is the Difference between Initial Margin and Variation Margin?

Initial margin is the collateral that is posted by both parties to a derivatives contract at the start of the transaction. It is intended to cover any potential future losses that may arise if one of the parties defaults.

Variation margin is the collateral that is paid by one party to the other on a daily basis to cover any losses from the previous day's price movements. The purpose of variation margin is to prevent large losses from accumulating over time.

What Is the Difference between Initial Margin and Variation Margin in a CCP?

What Is the Difference between Initial Margin and Variation Margin (Maintenance Margin)?

How Does Variation Margin Differ from Initial Margin in Mitigating Counterparty Risk?

What Is the Difference between Initial Margin and Variation Margin in Derivatives?

What Is the Difference between Initial Margin and Variation Margin in a Clearing House?

How Does Margin Requirements Relate to a Clearing House’s Risk Management in Options Trading?

What Is the Difference between Initial Margin and Variation Margin as Used by a CCP?

What Are the Initial Margin and Variation Margin, and How Do They Protect the Clearing House?

Glossar

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.

Initial Margin

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.