Initial margin
Also called: futures margin, F&O margin
The deposit required before taking a futures or option-selling position, set as a fraction of contract value.
Margin is security, not the maximum loss. Because it is small relative to contract value, a small price move is a large percentage of margin, and large moves or gaps can produce losses bigger than the margin. Margin rules are set under SEBI's framework and change over time.
Example
With ₹1 lakh of margin on a ₹5 lakh contract, a 5% fall costs 25% of the margin.
Learn more in these lessons
- Futures margin and mark-to-marketHow does futures margin work, and why can you lose more than you put in?
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