Futures margin is a good-faith deposit required by exchanges and brokers to open and maintain a futures position. Unlike margin in stock trading, futures margin is not a loan. It serves as a performance bond ensuring both parties in the contract can meet their obligations. The initial margin is the amount you must deposit to open a position, while the maintenance margin is the minimum balance you must keep in your account.

The leverage ratio tells you how many dollars of notional value you control per dollar of margin. For example, if you deposit $11,250 in initial margin to control a $225,000 E-mini S&P 500 contract, your leverage is 20x. This means a 1% move in the underlying index produces a 20% gain or loss on your deposited margin, amplifying both profits and risks.

A margin call occurs when your account equity falls below the maintenance margin level. At that point, your broker will require you to deposit additional funds to bring your account back to the initial margin level. If you cannot meet the margin call, your broker may liquidate your position at the current market price, potentially locking in a loss. Understanding these thresholds is essential for managing risk in futures trading.