Portfolio Margin Mode: Cross-Margin Trading Explained

What Is Portfolio Margin Mode?

Portfolio Margin Mode allows traders to manage spot, margin, perpetual swaps, futures, and options within a single account using a risk-based margin model. This approach calculates margin requirements by evaluating combined positions across asset classes, potentially reducing capital needs while maintaining efficient risk coverage.

Key Benefits:

• Unified Account: Trade multiple derivatives and spot assets seamlessly.
• Capital Efficiency: Lower margin requirements through portfolio risk offsets.
• Cross-Currency Support: Equity in various currencies converts to USD for margin purposes.

Eligibility Criteria for Portfolio Margin

To qualify, users must:

• Hold a minimum net capital of $10,000 USD.
• Acknowledge familiarity with portfolio margin concepts.

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How Portfolio Margin Risk Offsetting Works

OKX offers two margin calculation modes:

1. Derivatives-Only Mode

• Groups derivatives (perpetual swaps, futures, options) by underlying asset (e.g., BTC-USD, ETH-USDT).
• Margins are calculated per risk unit, allowing offsets within the same asset class.

2. Spot-Derivatives Risk Offset Mode

• Integrates spot holdings into margin calculations for derivatives.
• Significantly reduces margin requirements when derivatives are hedged with spot positions.
• Users can choose between USDT, USDC, or Crypto margin for spot allocations.

Example Risk Unit Grouping:

Margin Calculation Methodology

Maintenance Margin (MMR) Components

MMR is derived from 7 risk scenarios per risk unit:

1. Spot Shock (MR1): Simulates price movements (±4%–25%) and volatility changes.
2. Theta Decay (MR2): Measures 24-hour option value erosion.
3. Vega Risk (MR3): Captures volatility shifts across expirations.
4. Basis Risk (MR4): Accounts for futures price disparities.
5. Interest Rate Risk (MR5): Models yield curve shifts (options only).
6. Extreme Move (MR6): Tests worst-case price swings (up to ±50%).
7. Minimum Fee (MR7): Covers liquidation slippage and transaction costs.

Formula:
MMR = max(Spot Shock + Basis + Vega + Interest Risk, Minimum Fee)

Initial Margin (IMR)

IMR = 1.3 × Derivatives MMR + Borrowed IMR

Portfolio Margin Liquidation Process

Liquidation triggers at 100% margin ratio and follows a tiered approach:

1. Dynamic Delta Hedging (DDH): Adjusts futures/swaps to offset options risk.
2. Basis Hedging: Liquidates futures with mismatched expiries.
3. Position Reduction: Prioritizes high-liquidity assets to restore safety.

Liquidation Flow:
![Flowchart: DDH → Basis Hedge → Position Reduction]

FAQs

1. How does spot-derivatives risk offsetting lower margins?

By treating spot holdings as collateral for derivatives, the system reduces net exposure, thereby decreasing margin needs.

2. Can I test portfolio margin before switching?

Yes, use OKX’s Portfolio Simulator to model margin impacts on existing or hypothetical positions.

3. What happens if my account falls below 300% margin ratio?

A warning is issued. At 100%, liquidation begins with DDH to mitigate losses.

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Appendix: Key Parameters

Note: Parameters adjust dynamically based on market conditions.

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