11.6What is the margin requirement in futures?
1What is it?
To trade futures you deposit a margin, a % of contract value (SPAN + exposure margin), rather than the full amount.
2Why does it exist?
Margin protects the clearing corporation if you lose. It is also what creates leverage.
3Calculation
Margin ≈ Contract value × margin %
- Contract value ₹16.25 lakh, margin ≈ 12% (illustrative).
- Margin ≈ ₹1.95 lakh.
You control ₹16.25 lakh with ~₹1.95 lakh, about 8× leverage.
4Quick revision
- Margin = deposit, not cost.
- Creates leverage.
- Varies with volatility.
5Knowledge check
Q1. Is margin the maximum you can lose?Show answer
No, you can lose more than your margin.
Q2. Two parts of futures margin?Show answer
SPAN and exposure margin.
Q3. ₹10 lakh contract at 15% margin?Show answer
₹1.5 lakh.
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