Portfolio Margin (PM) accounts enable traders to execute spot, leverage, perpetual, futures, and options trades within a single account while leveraging a risk-based margin model. This approach dynamically calculates margin requirements by assessing combined positions across all five product types, optimizing capital efficiency without compromising risk coverage. Similar to
👉 cross-currency margin systems, assets are converted into USD equivalents for initial and maintenance margin calculations.
Eligibility Criteria for Portfolio Margin Accounts
To activate PM mode, users must:
- Maintain a minimum net equity of $10,000 USD.
- Declare understanding of PM account mechanics.
Risk Offset Mechanisms in Portfolio Margin
Risk Unit Consolidation
PM merges risk units by underlying asset. Perpetuals, futures, and options linked to the same asset (e.g., ETH) are grouped into unified risk units:
| Mode | ETH Risk Unit Components |
|---|---|
| Spot Hedge | ETHUSDT perpetuals/futures, ETHUSDC perpetuals/futures, ETHUSD derivatives, ETH options, ETH spot holdings, and open spot orders. |
Automatic Spot Inclusion
Spot positions are auto-classified into risk units. When spot holdings offset derivatives (e.g., long spot + short futures), margin requirements decrease proportionally.
Portfolio Margin Calculation Methodology
Maintenance Margin (MMR) is derived by simulating maximum potential losses per risk unit under stressed market conditions. Initial Margin (IMR) = 1.3 × (Derivatives MMR) + Borrowing IMR.
Key Components:
Spot Hedge Allocation
- If spot > 0 and derivatives delta < 0: Hedge = min(spot, derivatives delta).
- If spot < 0 (borrowed) and derivatives delta > 0: Hedge = -min(abs(spot), derivatives delta).
Derivatives MMR Formula
Derivatives MMR = min( max(positive delta MMR, negative delta MMR, total MMR), max(positive delta MMR with spot orders, negative delta MMR with spot orders, total MMR with spot orders) )- Borrowing Margin
Calculated based on the latest leverage tier requirements for maintenance/initial rates.
Margin Risk Factors (MR1–MR9)
| Risk Type | Description | Applicability |
|---|---|---|
| MR1: Price/Volatility Shocks | 21-scenario stress test (7 price moves × 3 volatility shifts) | All derivatives + spot |
| MR2: Time Decay | Option value erosion over 24 hours | Options only |
| MR3: Volatility Term Structure | Differing volatility impacts across maturities | Options only |
| MR4: Basis Risk | Spot-futures price divergence + tenor effects | Derivatives + spot hedges |
| MR6: Extreme Moves | 2× MR1 price swings | All products |
| MR9: Stablecoin Depeg | Risk from cross-currency hedges if USDT/USDC deviates from USD | Multi-currency positions |
Example: For BTC derivatives:
- MR1 price shocks: ±12% moves
- MR6 extreme shocks: ±24% moves
Liquidation Process
Triggered at 100% MMR, liquidation proceeds sequentially:
- Stablecoin Depeg Hedge (DDH1)
- Delta Dynamic Hedge (DDH2)
- Basis Risk Reduction
- Standard Position Closure
FAQs
1. How does PM differ from isolated margin?
PM aggregates risk across all positions, allowing offsets that reduce total margin. Isolated modes treat each product separately.
2. What happens if my net equity falls below $10,000?
PM features are disabled until equity is restored. Existing positions remain but require higher margins.
3. Can I manually select hedged spot positions?
No. PM automatically identifies offsets, but users can set custom hedge ratios per risk unit.
4. Why are options liquidated differently?
Low-liquidity options may be dynamically hedged (e.g., via futures) rather than closed outright.
5. How often are margin requirements recalculated?
Real-time, with hourly stress-test updates for MR1/MR6 scenarios.
👉 Explore advanced margin strategies to optimize your PM account performance.