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Futures and Options

What is a “margin”?

An exchange obligates sellers and buyers to deposit cash in the form of a margin, and to clear differences in price between the future price of the contract and the current or daily price, as it changes, until the future contract is settled. This cash is then deposited into either the buyer’s or seller’s account, depending on the direction of the price movement. This margin may be between 5–15% of the contract’s value, and is sometimes referred to as a “performance bond”.


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