# Why Is the Maintenance Margin Typically Lower than the Initial Margin? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

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## Why Is the Maintenance Margin Typically Lower than the Initial Margin?

The initial margin is set higher to provide a larger safety buffer for the exchange to absorb immediate adverse price movements before the account becomes under-collateralized. The maintenance margin is the minimum level required to keep the position open.

The difference between the two allows time for the trader to meet a margin call before the account's equity is fully depleted.

- [Why Is ‘Over-Collateralization’ Necessary for Crypto-Backed Stablecoins?](https://learn.greeks.live/path/why-is-over-collateralization-necessary-for-crypto-backed-stablecoins/)

- [Define “Maintenance Margin” and Its Role in Preventing Margin Calls](https://learn.greeks.live/path/define-maintenance-margin-and-its-role-in-preventing-margin-calls/)

- [How Does the Exchange Calculate the Amount of Margin Required to Meet the Call?](https://learn.greeks.live/path/how-does-the-exchange-calculate-the-amount-of-margin-required-to-meet-the-call/)

- [Is Maintenance Margin Typically Higher or Lower than Initial Margin?](https://learn.greeks.live/path/is-maintenance-margin-typically-higher-or-lower-than-initial-margin/)

- [What Is the Significance of the Difference between the Two Margin Levels?](https://learn.greeks.live/path/what-is-the-significance-of-the-difference-between-the-two-margin-levels/)

- [In Options, How Does a Tokenized Asset’s Volatility Affect the Liquidation Threshold?](https://learn.greeks.live/path/in-options-how-does-a-tokenized-assets-volatility-affect-the-liquidation-threshold/)

- [What Is the Difference between an Equity Margin Call and a Portfolio Margin Call?](https://learn.greeks.live/path/what-is-the-difference-between-an-equity-margin-call-and-a-portfolio-margin-call/)

- [What Is the Current Transaction Threshold for the FATF Travel Rule?](https://learn.greeks.live/path/what-is-the-current-transaction-threshold-for-the-fatf-travel-rule/)

## Glossar

### [Maintenance Margin](https://learn.greeks.live/area/maintenance-margin/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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.

### [Adverse Price Movements](https://learn.greeks.live/area/adverse-price-movements/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Volatility ⎊ Adverse price movements within cryptocurrency derivatives, options, and financial derivatives represent deviations from anticipated price trajectories, often amplified by leverage and market microstructure effects.

## Discover More

### [Does a Deleveraging Event Typically Lead to Higher or Lower Implied Volatility?](https://learn.greeks.live/path/does-a-deleveraging-event-typically-lead-to-higher-or-lower-implied-volatility/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Does a Deleveraging Event Typically Lead to Higher or Lower Implied Volatility?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Autonomous-Organization-Governance-Token-Lifecycle-Volatility-Surface-Configuration.webp)

Higher implied volatility, as the aggressive price movement and instability cause option premiums to spike.

### [How Does Portfolio Margining Potentially Lower Overall Margin Requirements?](https://learn.greeks.live/path/how-does-portfolio-margining-potentially-lower-overall-margin-requirements/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Portfolio Margining Potentially Lower Overall Margin Requirements?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Autonomous-Organization-Governance-Mechanism-Propagating-Kinetic-Volatility-Transfer-via-Exotic-Options-Structures.webp)

Margin is calculated on the net risk of the entire portfolio, allowing offsetting positions to reduce the total required collateral.

### [Is There a Standard Percentage Difference between Initial and Maintenance Margin?](https://learn.greeks.live/path/is-there-a-standard-percentage-difference-between-initial-and-maintenance-margin/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Is There a Standard Percentage Difference between Initial and Maintenance Margin?](https://learn.greeks.live/wp-content/uploads/2025/10/Futuristic-X-Wing-Configuration-Simulating-Decentralized-Autonomous-Organization-Governance-Token-Flow-Over-Mountainous-Liquidity-Basins.webp)

No universal standard, but maintenance margin is always lower than initial margin, creating a necessary buffer before liquidation.

### [Why Are VIX Futures Typically Used for Short-Term Hedging Rather than Long-Term Protection?](https://learn.greeks.live/path/why-are-vix-futures-typically-used-for-short-term-hedging-rather-than-long-term-protection/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Are VIX Futures Typically Used for Short-Term Hedging Rather than Long-Term Protection?](https://learn.greeks.live/wp-content/uploads/2025/10/Close-Up-of-Digital-Asset-Interface-Reflecting-Limit-Order-Book-Dynamics-and-Option-Greeks-Visualizations.webp)

The high cost of "roll yield" in a contango market makes maintaining a long VIX futures position for the long term prohibitively expensive.

### [Why Is Variation Margin Typically Paid in Cash, While Initial Margin Can Be Non-Cash Collateral?](https://learn.greeks.live/path/why-is-variation-margin-typically-paid-in-cash-while-initial-margin-can-be-non-cash-collateral/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is Variation Margin Typically Paid in Cash, While Initial Margin Can Be Non-Cash Collateral?](https://learn.greeks.live/wp-content/uploads/2025/10/Aerodynamic-Leading-Edge-Structure-Illumination-High-Frequency-Digital-Asset-Hedging-Interface.webp)

VM is cash for immediate daily settlement of realized P&L; IM can be non-cash collateral as a buffer against potential future loss.

### [Why Is a European-Style Option Typically Less Expensive than an American-Style Option on the Same Underlying Asset?](https://learn.greeks.live/path/why-is-a-european-style-option-typically-less-expensive-than-an-american-style-option-on-the-same-underlying-asset/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is a European-Style Option Typically Less Expensive than an American-Style Option on the Same Underlying Asset?](https://learn.greeks.live/wp-content/uploads/2025/10/Retro-Futuristic-Rocket-Fin-Analogous-to-Decentralized-Finance-Governance-Structure-Vector-Configuration.webp)

The lack of early exercise flexibility in the European option makes its premium lower than the American option's.

### [What Is the Purpose of the Initial Margin and Maintenance Margin in Derivatives Trading?](https://learn.greeks.live/path/what-is-the-purpose-of-the-initial-margin-and-maintenance-margin-in-derivatives-trading/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Purpose of the Initial Margin and Maintenance Margin in Derivatives Trading?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetrical-Bifurcation-Highlighting-Layered-Asset-Structures-in-Decentralized-Finance-Oracles.webp)

Initial margin is the deposit to open a position; maintenance margin is the threshold that triggers a margin call to cover losses.

### [How Is the Initial Margin Amount Typically Calculated by a Clearing House?](https://learn.greeks.live/path/how-is-the-initial-margin-amount-typically-calculated-by-a-clearing-house/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the Initial Margin Amount Typically Calculated by a Clearing House?](https://learn.greeks.live/wp-content/uploads/2025/10/Antenna-Apex-Trajectory-Modeling-Stochastic-Volatility-Surface-Dynamics-In-Decentralized-Finance.webp)

Initial margin is calculated using risk models like SPAN, considering volatility, position size, and time to expiration.

### [Why Is the Volatility Skew Typically Steeper for Equity Options than for Currency Options?](https://learn.greeks.live/path/why-is-the-volatility-skew-typically-steeper-for-equity-options-than-for-currency-options/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is the Volatility Skew Typically Steeper for Equity Options than for Currency Options?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetry-in-Blockchain-Asset-Hedging-Symmetric-Pairwise-Futures-Contract-Execution-Visualized.webp)

Equity skew is steeper due to higher demand for downside protection (crash fear); currency risk is perceived as more symmetric.

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