What Is the Difference between Initial Margin and Variation Margin for Futures?
Initial margin is the collateral required to open a futures position, serving as a good-faith deposit to cover potential losses from adverse price movements. Variation margin, or maintenance margin, is the amount required daily to bring the account back to the initial margin level after daily marking-to-market.
Variation margin is paid by the losing party to the winning party to reflect the day's profits and losses.
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.
Initial Margin Level
Definition ⎊ Initial margin level represents the minimum amount of collateral, typically cash or eligible assets, that a trader must deposit and maintain in their account to open a new leveraged position in derivatives.