In finance, a margin is collateral that the holder of a position in securities, options, or futures contracts has to deposit to cover the credit risk of his counterparty. This risk can arise if the holder has done any of the following:borrowed cash from the counterparty to buy securities or options,sold securities or options short, orentered into a futures contract. The collateral can be in the form of cash or securities, and it is deposited in a margin account. On U.S. futures exchanges, margin is formally called performance bond.
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The minimum level at which the equity in a futures account must be maintained. If the equity in an account falls below this level, a margin call will be issued, and funds must be added to bring the account back to the initial margin level. The maintenance margin level generally is 75% of the initial margin requirement.
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