Initial Margin
The minimum deposit required to open one futures contract, set by the exchange clearing house (CME, CBOT, NYMEX).
Formula
Leverage = Notional Value / Initial Margin
Initial margin is the good-faith deposit required before entering a futures position. It is set by the clearinghouse — not the broker — based on the historical volatility of the contract and is updated periodically (usually during expiry week or after large market moves).
Initial margin is not a fee or down-payment; it is collateral held against potential adverse moves. Funds remain in the trader's account and earn interest in some structures.
Brokers may require more than the exchange minimum — especially overnight — but never less. Intraday (day-trading) margin is a separate, lower figure offered by retail brokers for positions closed before settlement.
Example
CME sets ES initial margin at ~$15,840 per contract. At a notional of $270,000, that's roughly 5.9% of exposure. A trader with a $50,000 account can hold 3 contracts at the standard rate (3 × $15,840 = $47,520) while retaining some buffer.
Related Terms
Clearinghouse / Central Counterparty (CCP)
The entity that steps between buyer and seller in every cleared trade, becoming counterparty to both and guaranteeing performance so neither faces the other's default.
IntermediateDay-Trading Margin
A reduced intraday margin rate offered by retail brokers for futures positions opened and closed within the same session.
IntermediateFutures Contract
A standardized, exchange-traded agreement to buy or sell an asset at a fixed price on a set future date, settled daily via mark-to-market.
BeginnerLeverage (Futures)
The ratio of a futures contract's full notional exposure to the margin posted, amplifying both gains and losses on the capital committed.
IntermediateLiquidation
The forced closure of a futures position by the broker when account equity falls below margin requirements.
IntermediateMaintenance Margin
The minimum equity level a futures account must maintain; falling below triggers a margin call demanding top-up to initial margin.
BeginnerMargin-to-Tick Ratio
Initial margin divided by tick value — the number of adverse ticks required to wipe out all posted margin on one contract.
AdvancedMark-to-Market
The daily revaluation of open futures positions to the settlement price, with gains and losses settled in cash each session.
IntermediateMicro Futures
CME contracts at one-tenth the size of E-mini equivalents — designed for fine-grained position sizing and smaller accounts.
BeginnerNotional Value
The full economic exposure of a futures position: Futures Price × Contract Multiplier (or Contract Size).
IntermediateOvernight Margin
The full exchange-minimum initial margin required to carry a futures position through the close into the next session.
IntermediateSPAN Margin
Standard Portfolio Analysis of Risk — the CME's risk-based margin system that calculates required margin across a portfolio of futures and options.
AdvancedVariation Margin
The daily cash transfer that settles mark-to-market gains and losses on open futures positions, paid to the clearinghouse and credited to winners.
Intermediate