Contracts margin is a good-faith deposit, or an amount of capital one needs to post or deposit to control a futures contract.
Cross-margin mode is available in Huobi Perpetual Swaps
The position margin required varies with the price movements.
Calculation of Margin
Position margin = (contract face value * quantities of contracts) / latest price / leverage ratio.
E.g.1 : If the user opens long 10 lots of BTC contracts (with contract face value of 100 USD/lot), the latest price is 5000 USD/BTC and leverage ratio is 10x, then,
Position Margin = (100*10)/5000/10=0.02BTC.
E.g.2 : If the user opens long 10 lots of EOS contracts (with contract face value of 10 USD/lot), the latest price is 5 USD/EOS and leverage ratio is 10x, then,
Position Margin =(10*10)/5/10=2 EOS.
Differentiate Margin System
In order to maintain the stability of the contract market and reduce the risk of large positions, Huobi Futures uses a differential margin system. When the user chooses 20x or more than 20x leverage, and the user's account equity exceeds a certain range, the available margin will change. Choosing 10x and lower leverage will not be influenced by differential margin system. Details are showed as follow:
Unit: underlying asset
【The above data and indicator contents may be adjusted in real time according to market conditions, and the adjustments will be made without further notice.】
For example, if the user's account equity is 120BTC, choosing 20x leverage, the available margin shall be 60 BTC. Therefore，the maximum amount of BTC that the user can use to open positions is 60.
Note: For maximum scale of Differentiate Margin System,
Δ(Available Margin) / Δ(Equity) = 1 / Corresponding leverage
Locked Margin Optimization Scheme
To improve asset utilization and to reduce position margin for users, Huobi Perpetual Swap implements locked margin optimization scheme when users have swaps with both long and short positions for the same coin.
When users have swaps contracts with both long and short positions for the same coin. →（same types asset）, locked margin optimization scheme could reduce part of users’ position margin. The formula is as below:
New position margin for a single token = Long position margin for a single token + Short position margin for a single token - Optimization ratio for this token * Locked margin for a single token
- Long position margin for a single toekn= abs [long position quantity of a single token* contract face value / contract latest price / leverages]
- Short position margin for a single token= abs [short position quantity (cont) of a single token * contract face value / contract latest price / leverages]
- Locked margin for a single token = min (Long position margin for a single token, Short position margin for a single token)
- The optimization ratio of locked margin is 100%.
Tom holds a long position of 1000 conts BTC Swap and a short position of 800 conts of BTC Swap both in 20x leverage. The face value of each contract is 100 USD. Assume the latest price of BTC Swap is 8000, the new position margin of Tom is calculated as following:
- Calculate Tom’s long and short position margin. According to the formula, Position margin = Face value * Position quantity / Latest price / leverage, then the Long position margin is 100 * 1000 / 8000 / 20 = 0.6250 BTC, and the short position margin is 100 * 800 / 8000 / 20 = 0.5000 BTC.
- Calculate Tom’s locked margin. According to the formula, Locked margin = min (Long position margin, Short position margin), then the locked margin is min ( 0.6250, 0.5000 ) = 0.5000 BTC.
- Calculate Tom’s new position margin. According to the formula, New position margin = Long position margin+ Short position margin – locked margin * optimization ratio of locked margin=0.6250 + 0.5000 - 0.5000 *100% = 0.6250 BTC.
- From above calculation we can get that in this optimization mechanism, the new position margin of Tom is 0.6250 BTC, which is much lower than its original 0.6250 + 0.5000 = 1.125 BTC.
Margin rate is an indicator used to assess assets risk；
Margin Rate = (Account Equity / Used Margin) * 100% - Margin call coefficient；
The lower of margin rate, the higher risk of the account will be. When the margin rate is ≤0%, liquidation will be triggered.
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