Understanding Margin Modes for Options Trading
Options trading involves different margin modes that determine how positions are managed and margins are calculated. Below, we explore the three primary margin modes: Single-Currency Cross Margin, Multi-Currency Cross Margin, and Isolated Margin (for Single/Multi-Currency/Portfolio).
1. Single-Currency Margin: Cross Margin
In this mode, users can only open short positions for options. To open long positions, switch to Isolated Margin (refer to Section 3).
Key Metrics for Positions:
| Term | Definition |
|---|---|
| Total | Long positions (+), Short positions (-). |
| Options Value | Total Positions × Mark Price × Contract Multiplier × Contract Value. |
| P&L | Unrealized profit/loss: (Mark Price - Avg. Open Price) × Total Positions × Contract Multiplier × Contract Value. |
| P&L Ratio | Long: (Mark Price – Avg. Open Price) / Avg. Open Price. Short: Inverse. |
| Initial Margin | 0 for long positions. For short positions, see Options Margin Calculation. |
| Maintenance Margin | 0 for long positions. For short positions, refer to the link above. |
👉 Mastering Margin Calculations
2. Multi-Currency Margin: Cross Margin
Similar to Single-Currency Cross Margin, this mode restricts users to short positions. For long positions, use Isolated Margin (Section 3).
Position Metrics:
(Same as Single-Currency Cross Margin)
3. Isolated Margin Mode
This mode allows both long and short positions with isolated margin management.
Additional Metrics:
| Term | Definition |
|---|---|
| Margin (Balance) | Initial Margin + Manual Adjustments. |
| Margin Ratio | Margin Balance / (Maintenance Margin + Liquidation Fee). |
Key Concepts in Options Profit/Loss
- Mark Price vs. Avg. Open Price: Determines unrealized P&L.
- Contract Multiplier: Amplifies the value of each contract.
- Margin Requirements: Vary by position type (long/short) and mode.
FAQs
Q1: Can I open long positions in Cross Margin mode?
No. Cross Margin (Single/Multi-Currency) only supports short positions. Use Isolated Margin for longs.
Q2: How is P&L Ratio calculated for short positions? (Avg. Open Price - Mark Price) / Avg. Open Price.
Q3: What’s the difference between Initial and Maintenance Margin?
Initial Margin is required to open a position; Maintenance Margin ensures it stays open.
Q4: Is margin required for long options positions?
No. Initial and Maintenance Margins are 0 for long positions.
Summary
Understanding margin modes and P&L calculations is crucial for effective options trading. Always choose the right margin mode based on your strategy (long/short). For detailed margin rules, refer to OKX’s official guides.
Note: All links direct to OKX’s official resources for accuracy.