What Is the Difference between “Portfolio Margin” and “Standard Margin” in Derivatives?
Standard margin calculates the risk for each derivative position in isolation. Portfolio margin is a risk-based approach that calculates the total margin required by netting the risk across a trader's entire portfolio.
If a portfolio contains offsetting positions (e.g. a long future and a short option), the portfolio margin requirement will be significantly lower than the standard margin, as the overall net risk is lower.
