Initial and Maintenance Margin Question

J

JJ13

Hello,

I have a question regarding initial and maintenance margin for futures trading.

Let's take the e-mini S&P 500 as an example.

If I want to hold my position overnight, I understand the margin is more than if I just day traded - opened and closed my position the same day.

The margin for holding a position overnight is $5,625 for initial margin and $4,500 for maintenance.

Here's where I'm confused.

Do I need $5,625 to open a position (1 contract) and also $4,500 to stay in my account to hold the position overnight, which would make the total required to trade 1 contract overnight $10,125? Or do I just need $5,625?

That's where I'm confused. How is the $4,500 accounted for?
 
You only need the $5,625 to open the position and hold overnight according to the CME. However, you would most likely need much less to open it, since most brokers offer $500 day-trade margins. If you want to hold the position overnight though you'd need the full $4,500.

Just my experience though - my broker never held me to the overnight margin requirements.
 
You need $5625 to take the postion. If the postion drops more than $1125 (22.5 points) to below $4500 you need to bring the margin back up to the original $5625 or have your position liquidated for violating maintenance margin.

Automated futures brokers (such as IB) will just autoliquidate your position when the maintenance margin is violated. If you have on multiple contracts then only part of the position will be autoliquidated such that the remaining position once again meets the inital margin requirement.

If you want to hold any futures contract overnight you better have well above the initial minimum margin to protect against adverse price spikes.
 
Thanks.

2 more quick questions:

1) So you can trade automatically? What does that mean? You input a trading strategy with a broker and it'll automatically buy/sell for you according to your parameters?

2) Is there a limit up and down for the S&P emini? Can this market only go up or down so much in one day?
 
Quote from tommymoose:

However, you would most likely need much less to open it, since most brokers offer $500 day-trade margins.
More...

Where do you find such brokers? on IBs margin requirements page it states:

Exchange: GLOBEX

IB Underlying: ES

Product description: E-mini S&P 500

Trading Class: ES

Intraday Initial: $2813

Intraday Maintenance: $2250

Overnight Initial: $5625

Overnight Maintenance: $4500

Currency: USD

Thank you for any insight you can provide!
 
So if I want to avoid the maintenance margin for the ES with Interactive Broker when should I close the position ? before 4.00 pm (15 min before eth) or 3.pm (15 min before rth)?

Thanks,
A
 
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