Initial Margin

Initial Margin is the upfront deposit required by a broker or exchange before a trader can open a leveraged position in futures or options contracts. Set as a percentage of the contract's total value, it acts as a security deposit to cover potential losses. In India, the initial margin for equity futures is determined by exchanges using the SPAN (Standard Portfolio Analysis of Risk) methodology. Adequate maintenance of margin levels is crucial for traders to avoid margin calls and forced liquidation of positions by the broker.