Margin (finance)

In finance, a margin is collateral that the holder of a position in securities, options or futures contracts has to deposit to cover the credit risk of his counterparty. This risk can arise if the holder has

Related Topics:
Collateral - Securities - Option - Futures contract - Credit risk

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• borrowed cash from the counterparty to buy securities or options
• sold securties or options short, or
• entered into a futures contract.

The collateral can be in the form of cash or securities, and it is deposited in a margin account. On U.S. futures exchanges, margin is formally called performance bond.

Related Topics:
Futures exchange - Performance bond

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Margin (finance): Margin buying ►