What Is the Key Difference between Variation Margin and Maintenance Margin?
Maintenance margin is the minimum equity level that must be sustained in a margin account after a position is established. Variation margin, on the other hand, refers to the daily cash flow that occurs as a result of the daily marking-to-market process.
It is the amount added to or subtracted from the account to reflect the daily gains or losses. If the account drops below the maintenance margin, a margin call is issued.
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 Settlement
Settlement ⎊ Variation Margin Settlement within cryptocurrency derivatives functions as a daily recalibration of collateral obligations, reflecting mark-to-market losses on open positions.
Minimum Equity Level
Capital ⎊ Within cryptocurrency derivatives and options trading, the minimum equity level represents the absolute floor of net liquidatable assets required to maintain an open position, safeguarding against adverse market movements and ensuring operational solvency.
Maintenance Margin
Collateral ⎊ Within cryptocurrency derivatives and options trading, the maintenance margin represents the minimum equity a trader must maintain in their account to cover potential losses.
Daily Cash Flow
Projection ⎊ Daily cash flow within cryptocurrency, options, and derivatives contexts represents the net inflow and outflow of funds resulting from trading activities, collateral adjustments, and settlement processes on a given day.