# Futures Margin: Initial and Maintenance

> Futures margin is a performance bond, not a loan. Learn initial and maintenance margin, day trading margin, margin calls, SPAN and how to avoid forced liquidation.

Source: https://learn.tradelabsai.com/futures/futures-margin/  
Track: Futures · Level: Intermediate · Updated: 2026-10-03  
Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice.  
Cite as: TradeLabs Learn, "Futures Margin: Initial and Maintenance", https://learn.tradelabsai.com/futures/futures-margin/

Futures margin is the money you must deposit to open and hold a futures position. Unlike margin in a stock account, it is not a loan and you pay no interest on it. It is a good faith deposit, often called a performance bond, that covers potential losses so the clearing house can guarantee every contract. Because margin is a small fraction of a contract's value, futures are highly leveraged. Understanding how margin works, and how margin calls happen, is basic risk management. The general concept is in [Margin](https://learn.tradelabsai.com/markets/margin/).

## The types of futures margin

| Type | Meaning |
|---|---|
| Initial margin | The deposit required to open a position |
| Maintenance margin | The minimum account equity required to keep it open; usually lower than initial |
| Day trading (intraday) margin | Reduced margin some brokers offer for positions closed the same day |
| Variation margin | Daily gains and losses settled in cash |

Exchanges and clearing houses set minimum margins, which brokers can raise. Margins change with market volatility; during turbulent periods, exchanges often increase them, sometimes sharply.

## How margin and daily settlement interact

Every day, positions are marked to market at the settlement price. Gains are added to your account and losses subtracted. If equity falls below the maintenance level, you receive a margin call and must bring the account back to the initial margin level. See [Mark-to-Market](https://learn.tradelabsai.com/markets/mark-to-market/).

**Example: A margin call in crude oil**
You buy one WTI crude contract (1,000 barrels) at $80.00. Suppose initial margin is $6,000 and maintenance is $5,500, and you deposit exactly $6,000.

- Day 1: crude settles at $79.70. Loss $300. Equity $5,700. Above maintenance; no call.
- Day 2: crude settles at $79.20. Loss $500. Equity $5,200. Below $5,500: margin call. You must deposit $800 to restore equity to $6,000.
- If you do not, the broker can close your position, often without waiting.

A $0.80 move, 1% of the price, consumed 13% of your deposit. Margin figures are illustrative; check current requirements.

## Leverage implied by margin

```
leverage = contract value / margin
```

With E-mini S&P 500 futures at 5,000 (contract value $250,000) and margin of about $12,500, leverage is about 20 to 1. A 5% fall in the index loses $12,500, the entire margin. See [Leverage](https://learn.tradelabsai.com/markets/leverage/).

## How exchanges set margin

CME historically used a system called SPAN (Standard Portfolio Analysis of Risk), which estimates the worst likely one day loss across a range of price and volatility scenarios, and has been moving to a newer value at risk based framework, SPAN 2. Portfolios with offsetting positions, such as calendar spreads, receive lower margins because their risk is lower. See [Futures Spreads Explained](https://learn.tradelabsai.com/futures/futures-spreads-explained/).

## Day trading margins

Many brokers allow much lower margins for positions opened and closed in the same session, for example $500 to $1,000 for an E-mini contract. This increases leverage enormously. A position that is not closed by the cut off time must meet full overnight margin, or the broker may liquidate it.

**Watch out: Low day trading margin is not low risk**
A $500 margin on a contract worth $250,000 means a move of just 10 index points (0.2%) costs the whole deposit. Size positions by dollar risk, not by the margin your broker allows. See [Position Sizing](https://learn.tradelabsai.com/risk/position-sizing/).

## Margin calls and liquidation

- **Brokers may liquidate quickly,** sometimes intraday, if equity falls too far, without waiting for you to add funds.
- **Losses can exceed your deposit;** you owe any negative balance.
- **Margin can rise suddenly** in volatile markets, triggering calls even without a price move against you.

## Futures margin vs stock margin

| | Futures margin | Stock margin |
|---|---|---|
| Nature | Performance bond | Loan from broker |
| Interest | None on the margin itself | Interest on borrowed amount |
| Typical requirement | Roughly 3% to 12% of contract value | 50% initial for US stocks (Regulation T) |
| Settlement | Daily cash settlement | No daily cash settlement |

See [Account Types and Margin Rules](https://learn.tradelabsai.com/industry/account-types-and-margin-rules/).

## Managing margin risk

1. **Keep excess funds** well above maintenance margin.
2. **Size by risk,** not by available margin.
3. **Watch exchange margin changes,** especially before major events.
4. **Use stops,** knowing they may slip in fast markets.
5. **Avoid holding near limit** during illiquid periods.

## Frequently asked questions

### What is futures margin?

A deposit required to open and hold a futures position, acting as a performance bond rather than a loan.

### What happens if I get a margin call on futures?

You must deposit funds to bring your account back to the initial margin level, or the broker can close your positions.

### Why do exchanges raise margin requirements?

To protect the clearing system when volatility rises, since larger price swings mean larger potential daily losses.

Next, compare futures with private contracts in [Forwards vs Futures](https://learn.tradelabsai.com/futures/forwards-vs-futures/).

## Continue learning

- Next lesson: [Forwards vs Futures](https://learn.tradelabsai.com/futures/forwards-vs-futures/)
- Previous lesson: [Contract Months and Expiration](https://learn.tradelabsai.com/futures/contract-months-and-expiration/)
- Related: [Contract Months and Expiration](https://learn.tradelabsai.com/futures/contract-months-and-expiration/): Futures trade in specific contract months with letter codes and fixed expiry rules. Learn month codes, the front month, quarterly cycles and how expiry works.
- Related: [Margin](https://learn.tradelabsai.com/markets/margin/): Margin is the deposit you put up to borrow money or open leveraged positions. Learn initial and maintenance margin, margin calls, interest and how to avoid them.
- Related: [Leverage](https://learn.tradelabsai.com/markets/leverage/): Leverage lets you control a larger position with less money. Learn how leverage ratios work, how they magnify gains and losses and how to use leverage safely.
- Related: [How Futures Contracts Work](https://learn.tradelabsai.com/futures/how-futures-contracts-work/): A futures contract is a standardised agreement to buy or sell an asset at a set price on a future date. Learn how futures trade, margin, daily settlement and expiry.
- Related: [Mark-to-Market](https://learn.tradelabsai.com/markets/mark-to-market/): Mark-to-market means valuing positions at today's price and settling gains and losses daily. Learn how it works in futures accounts and why it matters for risk.
- Related: [Clearing Houses and Central Counterparties](https://learn.tradelabsai.com/market-structure/clearing-houses/): Clearing houses stand between buyers and sellers so every trade is honoured. Learn how central counterparties work, margin, default funds and why they matter.