What is SPAN and Exposure margin?

SPAN margin (Standard Portfolio Analysis of Risk) is the primary margin required when trading in Futures & Options (F&O). The exchange calculates it using factors such as the price, volatility, and other market variables to estimate the maximum possible loss on your position. This amount is collected when you place an order and may be revised by the exchange during the day as market conditions change.

Exposure margin is an additional margin charged on top of SPAN margin to safeguard against risks that SPAN margin may not fully cover.

• For index futures and selling index options, the exposure margin is 2% of the contract value (Spot price × Lot size). 
• For stock futures and selling stock options, it is 3.5% of the contract value or a calculation based on recent price movements—whichever is higher.

Together, SPAN margin and exposure margin form the initial margin, which is the total margin required to open a position.