Margin is a deposit or collateral amount you must maintain with your broker to open and hold certain Futures and Options positions. It is not a fee — it’s returned to you (adjusted for the position’s profit or loss) when you close the position.
Why It Exists
F&O positions can control an exposure much larger than the cash directly paid (leverage). Margin acts as a financial buffer to help cover potential losses, protecting the broader trading system’s stability.
Related Reading
Read the full explanation, including SPAN and Exposure margin, in Margin in F&O Trading Explained: SPAN and Exposure Margin.