Portfolio Margin is an advanced risk-based margin system that evaluates the overall risk of your trading portfolio through stress testing. This method considers mark price fluctuations and implied volatility (IV) of underlying assets to determine margin requirements, allowing partial offsets for hedging positions within derivatives portfolios.
Key Benefits of Portfolio Margin
Compared to Cross Margin (which calculates margin per position), Portfolio Margin offers:
- Reduced Margin Requirements: Hedged positions significantly lower margin needs
- Unified Risk Assessment: Combines derivatives (USDT/USDC) and spot assets in stress testing
- Optimized Capital Efficiency: Enables more strategic position sizing during stable market conditions
Margin Calculation Components
1. Maintenance Margin Formula
Maintenance Margin = Maximum Loss + Contingency Components
Maximum Loss Determination
Bybit's stress testing evaluates:
- Underlying asset mark price movements (±10-30% scenarios)
- Implied volatility changes (typically ±20-50% IV adjustments)
- Option price decay near expiration (time-weighted adjustments)
Example: A hedged BTC options/perpetual contract portfolio might see margin reductions from $4,500 to $1,500 through effective risk offsetting.
Contingency Components
Five critical contingency factors:
| Component | Calculation Formula | Key Parameters |
|---|---|---|
| Short Options | Net Short Options Nominal Value × Coefficient × Index Price | Margin Parameters |
| Vega Spread | Days Difference × Vega Hedge Qty × Factor × Index Price | BTC/ETH: 0.03% |
| USDT-USDC Spread | Delta-based formula accounting for stablecoin fluctuations | Varies by market conditions |
| Delta Spread | Combined Time Difference × Hedge Delta × Factor | Basis Risk Factor: 45-60% |
| Perpetual/Futures | Σabs(Contract Qty) × Risk Factor × Index Price | Updated during volatility |
2. Initial Margin Requirements
Initial Margin = Maintenance Margin × IM Factor
IM Factors are asset-specific and regularly updated in Bybit's Margin Parameters.
Liquidation Process Overview
👉 Learn about advanced liquidation prevention strategies
- With Borrowed Assets: Automatic repayment triggers at 85% MMR
Without Borrowings:
- 100% MMR: Order cancellations + partial liquidation
- Continues until MMR drops to 90%
Spot Hedging Features
Supported assets fall into two categories:
| Asset Class | Basis Factor | Risk Threshold |
|---|---|---|
| BTC/ETH | 45% | 5% |
| Other Coins | 60% | 5% |
Important Notes:
- Spot assets used for hedging become non-transferable
- Eligible assets vary by volatility conditions
- Basis margin safety buffer: -2.5%
FAQ Section
Q: How does Portfolio Margin differ from Cross Margin?
A: Portfolio Margin evaluates your entire portfolio's risk through stress testing, while Cross Margin assesses each position independently. Hedged positions can significantly reduce margin requirements under Portfolio Margin.
Q: What happens to my spot assets when enabling Spot Hedging?
A: Assets used for hedging become temporarily non-transferable but remain available for trading. The system automatically calculates optimal hedging amounts based on your derivatives positions.
Q: How often are margin parameters updated?
A: Bybit may adjust contingency factors and IM multipliers during extreme market volatility. Always check the latest parameters before trading.