Standard Margin

Standard Margin is an options-only margin mode using simple per-position formulas to calculate margin requirements. Each position and open order is evaluated independently-no cross-margining or portfolio offsets.

Instruments: Standard Margin accounts can only hold options. Spot collateral and perpetuals are not supported in this mode. For multi-asset portfolios, use Portfolio Margin.

Mental Model

Standard Margin follows these principles:

1. Options only - This mode supports only option trading. No spot collateral or perps.
2. Long options are fully paid - When you buy an option, you pay the full premium upfront. No additional margin required.
3. Short options are margined - Selling options requires margin proportional to spot price and moneyness.
4. Premium flows immediately - BUY debits your cash, SELL credits your cash.
5. Open orders lock capital - BUY orders reserve premium, SELL orders add to margin requirement.
6. No portfolio offsets - A short call doesn't reduce the margin on a short put, even if they hedge each other.

Capital Flow Diagram

The Available Capital is what you can use for new orders. Premium Reserved reduces this even though it's not technically "margin"-it's cash you've committed to open BUY orders.

Definitions

Account Value

$$\text{Equity} = \text{Cash Balance} + \sum_i \text{UPNL}_i$$

Where:

• Cash Balance: Realized USDC from deposits, withdrawals, and settled trades
• Unrealized P&L: $(P_{\text{mark}} - P_{\text{entry}}) \times Q$ for each position

Margin Requirements

$$\text{Total IM} = \text{Position IM} + \text{Open Orders IM}$$ $$\text{Position IM} = \sum_i \text{IM}_i^{\text{short}}$$ $$\text{MM} = \sum_i \text{MM}_i^{\text{short}}$$

Long options contribute zero to margin requirements (fully paid at purchase).

Note: Standard Margin accounts do not hold perps or spot collateral, so these do not appear in the margin calculation.

Available Capital

$$\text{Available Capital} = \text{Equity} - \text{Position IM} - \text{Open Orders IM} - \text{Premium Reserved}$$

This is the initial_margin field in the API response (excess IM).

Formulas

Short Option Initial Margin

For each short option position:

$$\text{IM}_{\text{per-contract}} = \max(\alpha \cdot S - \text{OTM}, \beta \cdot S)$$ $$\text{Position IM} = |Q| \times \text{IM}_{\text{per-contract}}$$

Where:

• $\alpha = 0.15$ (15% spot percentage)
• $\beta = 0.10$ (10% floor percentage)
• $\text{OTM}$ = Out-of-the-money amount:
  • Calls: $\max(0, K - S)$ (positive when call is OTM, zero when ITM)
  • Puts: $\max(0, S - K)$ (positive when put is OTM, zero when ITM)
• $S$ = Current underlying price (ETH, BTC, etc.)
• $K$ = Strike price
• $|Q|$ = Absolute value of position size

Example: Short 10 ETH calls, strike 4000, ETH spot 3800:

$$\begin{aligned} \text{OTM} &= \max(0, 4000 - 3800) = 200 \\ \text{Base IM} &= 0.15 \times 3800 - 200 = 370 \\ \text{Floor IM} &= 0.10 \times 3800 = 380 \\ \text{IM}_{\text{per-contract}} &= \max(370, 380) = 380 \\ \text{Position IM} &= 10 \times 380 = 3{,}800 \text{ USDC} \end{aligned}$$

Short Option Maintenance Margin

$$\text{MM}_{\text{per-contract}} = \gamma \cdot S$$ $$\text{Position MM} = |Q| \times \text{MM}_{\text{per-contract}}$$

Where:

• $\gamma = 0.06$ (6% for both calls and puts)

Example: Same short 10 calls:

$$\begin{aligned} \text{MM}_{\text{per-contract}} &= 0.06 \times 3800 = 228 \\ \text{Position MM} &= 10 \times 228 = 2{,}280 \text{ USDC} \end{aligned}$$

Open Order Accounting

Open orders affect your margin differently depending on whether they're BUY or SELL:

BUY Orders (Premium Reservation)

When you place a BUY option order, the premium is immediately locked:

$$\text{Premium Reserved} = \sum_i (P_i \times Q_i^{\text{remaining}}) \quad \text{for all open BUY orders}$$

This premium is deducted from your available capital:

$$\text{Available Capital} = \text{Equity} - \text{Position IM} - \text{Open Orders IM} - \text{Premium Reserved}$$

Key point: BUY orders lock cash but don't add to Position IM (because longs have zero margin).

SELL Orders (Hypothetical Position IM)

When you place a SELL option order, it's treated as if you're already short:

$$\text{Open Orders IM} = \text{IM}(\text{positions} + \text{open SELLs}) - \text{IM}(\text{positions})$$

The exchange calculates margin as if all your SELL orders have filled, then subtracts current position margin. The difference is the Open Orders IM.

Key point: SELL orders add to margin requirement but don't lock cash.

On Fill

When an order fills:

• BUY fill: Premium Reserved decreases, position added (zero margin for longs)
• SELL fill: Open Orders IM decreases, position added (margin requirement moves from "open orders" to "position")

Net change is usually small since the margin was already accounted for.

On Cancel

• BUY cancel: Premium Reserved decreases immediately, capital freed
• SELL cancel: Open Orders IM decreases immediately, margin freed

Invariants

These identities MUST hold at all times:

Equity Composition

$$\text{Equity} = \text{Cash} + \sum_i \text{UPNL}_i$$

Margin Hierarchy

$$\text{Position IM} \geq \text{MM} \geq 0$$

Initial margin is always at least as strict as maintenance margin.

Long Option Margin

$$\text{Long option position} \Rightarrow \text{IM contribution} = 0$$

Longs are fully paid and require no margin.

Available Capital Calculation

$$\text{Available Capital} = \text{Equity} - \text{Position IM} - \text{Open Orders IM} - \text{Premium Reserved}$$ $$\text{Available Capital} \geq 0 \quad \text{(enforced by order admission)}$$

Premium Reservation Sum

$$\text{Premium Reserved} = \sum_i (P_i \times Q_i^{\text{remaining}}) \quad \text{for all open BUY orders}$$

Open Orders IM Non-Negativity

$$\text{Open Orders IM} \geq 0$$

Cannot be negative (you can't have "negative margin" from open orders).

Risk-Reducing Trades Always Allowed

$$\text{Closing position} \Rightarrow \text{Order admitted even if Equity} < \text{Total IM}$$

Risk-reducing trades bypass the IM check to help you avoid liquidation.

Worked Examples

Example 1: Long Buy with Premium Reservation

Setup:

• Cash Balance: 5,000 USDC
• No existing positions
• Equity: 5,000 USDC

Action 1: Place BUY order for 10 ETH-4000-C @ 150 USDC each

Calculations:

Premium for order = 150 × 10 = 1,500 USDC
Premium Reserved = 1,500 USDC
Position IM = 0 (no positions yet)
Open Orders IM = 0 (BUY orders don't add to this)
Available Capital = 5,000 - 0 - 0 - 1,500 = 3,500 USDC

Result: Order accepted. You have 3,500 USDC available for new orders.

Action 2: Try to place another BUY for 30 ETH-4000-C @ 150 USDC each

Calculations:

Premium for new order = 150 × 30 = 4,500 USDC
Total Premium Reserved = 1,500 + 4,500 = 6,000 USDC
Available Capital = 5,000 - 0 - 0 - 6,000 = -1,000 USDC

Result: Order rejected - insufficient funds. You'd need at least 6,000 USDC cash to place both orders.

Action 3: First order fills at 150 USDC

Post-Fill State:

Cash Balance = 5,000 - 1,500 = 3,500 USDC (premium paid)
Position: Long 10 ETH-4000-C @ 150 entry, mark 150
Unrealized P&L = (150 - 150) × 10 = 0
Equity = 3,500 + 0 = 3,500 USDC
Position IM = 0 (longs have zero margin)
Premium Reserved = 0 (order filled)
Available Capital = 3,500 - 0 - 0 - 0 = 3,500 USDC

Example 2: Short Sell with IM Impact

Setup:

• Cash Balance: 10,000 USDC
• No existing positions
• ETH Spot: 3,800 USDC

Action 1: Place SELL order for 5 ETH-4000-C @ 200 USDC each

Calculations:

First, calculate the hypothetical short position margin:

Spot = 3,800, Strike = 4,000
OTM = max(0, 4,000 - 3,800) = 200
Base IM = 0.15 × 3,800 - 200 = 370
Floor IM = 0.10 × 3,800 = 380
Per-Contract IM = max(370, 380) = 380
Hypothetical Position IM = 5 × 380 = 1,900 USDC

Margin breakdown:

Position IM = 0 (no filled positions)
Open Orders IM = 1,900 - 0 = 1,900 USDC
Premium Reserved = 0 (SELL orders don't lock cash)
Available Capital = 10,000 - 0 - 1,900 - 0 = 8,100 USDC

Result: Order accepted. Your open SELL order requires 1,900 USDC margin.

Action 2: Order fills at 200 USDC

Post-Fill State:

Cash Balance = 10,000 + 1,000 = 11,000 USDC (premium received: 200 × 5)
Position: Short 5 ETH-4000-C @ 200 entry, mark 200
Unrealized P&L = (200 - 200) × (-5) = 0
Equity = 11,000 + 0 = 11,000 USDC
Position IM = 1,900 USDC (now in positions, not open orders)
Open Orders IM = 0
Premium Reserved = 0
Available Capital = 11,000 - 1,900 - 0 - 0 = 9,100 USDC

Observation: Available capital increased from 8,100 to 9,100 (+1,000) due to premium received. The margin requirement (1,900) shifted from "Open Orders IM" to "Position IM", but the total requirement stayed the same.