Why Is Variation Margin Often Required to Be Paid in Cash? ⎊ Path

Why Is Variation Margin Often Required to Be Paid in Cash?

Variation Margin (VM) is typically required in cash (or highly liquid, cash-equivalent stablecoins) because it represents the realized loss on a position that must be immediately settled to zero out the daily exposure. Cash is the most liquid and least volatile asset, ensuring the CCP or counterparty can immediately cover the loss without the risk or delay associated with liquidating a less liquid asset.

How Does Variation Margin Settlement Affect a Trader’s Cash Balance Daily?

What Is the Difference between Initial Margin and Variation Margin (Maintenance Margin)?

What Is the Difference between Initial Margin and Variation Margin as Used by a CCP?

Which Major Cryptocurrencies Typically Have the Most Liquid Options Markets?

Define “Variation Margin” and Its Role in Derivatives Trading

What Are the Main Differences between Initial Margin and Variation Margin in Derivatives Trading?

How Does Daily Settlement Affect the Cash Flow for Futures Traders?

Is Variation Margin Always Paid in Cash, or Can It Be Paid in Other Assets?