Futures Margin
The good-faith deposit required to open and maintain a futures position, distinct from the leverage-based margin used in securities accounts.
What is Futures Margin?
Futures margin is the collateral a trader must deposit with a futures broker to open and hold a futures contract position. Unlike securities margin — which is a loan that requires interest — futures margin is a performance bond, not borrowed capital. There are two key levels: initial margin, the amount required to open a position, and maintenance margin, the minimum balance that must be maintained. When account equity falls below the maintenance margin due to adverse price moves, the broker issues a margin call requiring the trader to deposit additional funds (variation margin) to restore the account to at least the initial margin level. Failure to meet a margin call results in the broker liquidating the position. Futures margin levels are set by exchanges and adjusted for volatility.
Example
A trader buys one E-mini S&P 500 futures contract with a notional value of $250,000 (5,000 index points × $50). The exchange sets initial margin at $12,000 and maintenance margin at $10,900. If the market moves against the position by $1,100 (reducing equity below $10,900), the broker issues a margin call requiring the trader to deposit funds back to the $12,000 initial margin level.
Source: CME Group — Understanding Margin