What Is the Difference between Initial Margin and Variation Margin (Maintenance Margin)?
Initial margin is the collateral required to open a derivatives position, acting as a performance bond to cover potential future losses. Variation margin (or maintenance margin) is the additional collateral that must be posted daily to cover losses resulting from adverse price movements.
Initial margin is static until the position changes; variation margin fluctuates daily.
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.
Variation Margin Calls
Trigger ⎊ Variation Margin Calls represent a dynamic risk management mechanism integral to derivatives exchanges, particularly within cryptocurrency markets, functioning as a demand for funds to cover potential losses arising from adverse price movements.
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.