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Margin requirement for MOVE contracts
The Margin Requirements for MOVE Contracts are fairly straightforward:
Losses for LONGS can never exceed the option premium paid. Because of this, Longs can never get liquidated, and there are no margin requirements on the contract.
Losses for SHORTS are theoretically unlimited (if the price was to plummet or skyrocket), and shorts are therefore required to post a 10% margin requirement.
Short positions on MOVE contracts go into liquidation when Position Margin becomes less than the Maintenance Margin of the position, after factoring in unrealised losses.
The liquidation mechanism for MOVE contracts is the same as for futures contracts. A position on Delta is liquidated in a stepwise manner to reduce the market and price impact of liquidations. Traders who short MOVE contracts have the option of enabling Auto Margin Top-up to prevent positions from getting liquidated.
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