Margin Explainer
What is Margin
Margin is the collateral that you need to post when entering into a leveraged derivatives contract. The amount required to enter into a new position is referred to as Initial Margin. If the trade against you, the unrealised loss in your position is adjusted against the initially posted margin. You can keep your position open as long as the unrealised pnl adjusted margin is greater than the Maintenance Margin. Once Maintenance Margin is breached, liquidation process is triggered.
Margin Methodology in Delta Exchange
We follow a risk based approach to margining that allows for effective margin coverage while ensuring efficient use of capital. In this method, the risk of a group of positions and orders in futures and options with the same underlying is analysed together to compute the combined margin requirement for the entire group.
Obvious examples of such portfolios are option spreads and futures calendar spreads. The combination of long and short positions in spread trades makes them much less risky than standalone long or short positions in the same contracts. This lowering of risk is taken into account in portfolio margin.
Available Margin Modes
Delta Exchange offers three margin modes
Margin Mode Support
Not all contracts support all margin modes. Therefore, the choice of margin mode for an account will have a bearing on what contracts can be traded in that account.
Isolated Margin
All contracts support Isolated Margin mode. Therefore, in an account where Isolated Margin mode is selected, you can trade all contracts listed on Delta Exchange
Portfolio Margin
Only USD settled futures, perpetuals and options on BTC and ETH support Portfolio Margin mode
Salient points about margin modes
Margin mode is an account level property. Therefore, for a given account/ subaccount, you can select only one margin mode.
You can change the margin mode of an account/ sub-account from the margin mode selector on the top of the order placement panel or from the sub-account management page.
It is not possible to change the margin mode of a position or order. Therefore, margin mode of an account can only be changed when the account does not have any open positions or orders.
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