What Is “Variation Margin” and How Is It Related to MTM?
Variation margin is the daily cash flow payment made or received by a futures trader as a result of the Mark-to-Market (MTM) process. If the contract value has increased, the trader receives variation margin; if it has decreased, the trader pays it.
It represents the realized daily profit or loss and is essential for keeping the account equity aligned with the contract's current market value.
