Margin Formula:
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Definition: This calculator estimates the margin required for Futures and Options (F&O) trading based on contract value and margin percentage.
Purpose: It helps traders determine how much capital they need to maintain positions in the derivatives market.
The calculator uses the formula:
Where:
Explanation: The contract value is multiplied by the margin percentage to determine the capital required to maintain the position.
Details: Proper margin calculation ensures traders maintain sufficient funds to cover potential losses and meet broker requirements.
Tips: Enter the contract value in your currency and the margin percentage required by your broker. All values must be > 0.
Q1: What is contract value in F&O?
A: It's the total value of the derivative contract, calculated as (lot size × price) for futures or (lot size × premium) for options.
Q2: How is margin percentage determined?
A: Brokers set margin requirements based on exchange rules, volatility, and risk assessment of the underlying asset.
Q3: Does margin requirement change?
A: Yes, margins can change based on market volatility, position size, and broker policies.
Q4: What's the difference between SPAN and exposure margin?
A: SPAN margin covers 99% of price moves, while exposure margin covers extreme moves - both are part of total margin.
Q5: Can I trade with less than required margin?
A: No, brokers will typically square off positions if margin falls below requirements.