DerivativesCustomer Margin Last Trading Day Convergence Extrinsic Value Delivery Points Forward Contract
Exposure Margin
As we continue our exploration of the fascinating world of finance, let's delve deeper into the concept of exposure margin in the F&O segment. This margin serves as an additional layer of protection for our positions, complementing the Initial/SPAN® margin. When it comes to index futures and index option sell positions, the exposure margin is set at 3% of the notional value. However, for individual securities, the margin is higher at 5% or 1.5 standard deviations of the logarithmic returns of the stock over the last six months in the underlying cash market. Keep in mind, this margin is applied to the notional value of a position.
Related terms
Understand the meaning and definition of Customer Margin in the context of stock market, trading, and investments.
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MOREUnderstand the meaning and definition of Convergence in the context of stock market, trading, and investments.
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