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Emini Future Margins

The two types of margins in emini futures contracts are the initial margin and the maintenance margin. Initial margins is the funds required by the traders to deposit before they may initiate their positions. Maintenance margin is the minimum amount the traders need to ensure a position remains open.

Initial Margin or good faith deposit is typically about 7 % of the contract value plus the volatility and the underlying futures movement set by the exchange to control one contract.  The Maintenance Level is the water level that must be obtained to hold each futures contract.  Once the market drops below the Maintenance Level, the exchange requires the client to bring the account back to the Initial Margin Level to maintain control of the contract.   

Traders that know about the margin for stock trading will be well aware that this is the amount that can be borrowed from the broker using funds as collateral. Usually, this margin is 100%, which means that if $10,000 is being held in the account, then $20,000 of stock can be controlled. Of course, the margin can be greater for pros or semi-pros in some situations.

When trading stocks, the margin for trading is just another name for the borrowing power for stocks.

However, the proper definition of margin on Emini futures would be the minimum cash that is required for the Emini futures position. Much like a good faith deposit or a performance bond, the exchanges set the margin on Emini futures on the basis of the corresponding market volatility and they can change the margin whenever the volatility changes. Generally, the margin rates are anywhere between 2% and 15% of the value of the Emini futures contract, where the margin of most of the contracts is set around 5%. At today’s prices one is controlling roughly $87,000 worth of SP stock for $4,758 dollar in margin requirement- attractive bang for your buck.- maybe include this somewhere to show the benefit of futures margin or leverage.

The value of this margin can be reduced by individual broker for intraday positions, which are positions that open and close on the same day. This causes the margin to widely vary between different brokers. Nonetheless, the margin is never higher than the value the exchanges have established, taking into account all kinds of positions, even those that traders hold overnight. Usually, the margin is naturally higher for these positions so that the higher volatility when trading is barely active can be compensated. The exchange does not require margin unless a position is held past the close of that session (overnight), so each firm may decipher the potential risk and the amount of money necessary to control that contract for a session.

When trading Emini futures contracts, there are two types of margins, namely the initial margin and the maintenance margin. The former is the traders require and have to deposit before they can initiate their positions. The other is the minimum amount of buying/cash power that traders require in order to ensure that the position remains open.

Although traders must meet the initial margin requirements at the time of the trade, the maintenance margin only becomes a factor as a result of a decrease in the account value. In case the account value drops below the maintenance margin that is required, a margin call for funds is sent out to the trader. Then sufficient cash has to be added by the trader so that the position’s initial margin requirement is fulfilled.

Here is an example to better explain how the initial and maintenance margins are different from each other.

Let’s assume that the trading account of a trader contains $5,000 and an intraday position needs to be opened in the Emini S&P. This trade can only take place if the account contains at least $2,250. This would be the initial margin of one Emini S&P futures contract that the broker has set. Since the initial margin is less than the account balance, the position could be opened and even two Eminis could be purchased. Read here more about day trading futures. Now let’s supposed that one Emini futures contract was purchased based on the above example, the account value could drop to say $1,700 if they market moved against the trader. Go to this website to get better apprised about emini futures. Since a $1,800 maintenance margin would now be greater than the account value, a margin call for $100 would be sent to the trader, which is the difference between the account value and the initial margin.[Leslie Burton]   Once the account drops below the Maintenance Level, the client must bring his account back up to the Initial Margin.