The amount of cash or marginable securities (e.g., treasuries, blue chip stocks) that a holder of a futures or options must have in his account to trade futures or to write uncovered options. In futures, margin requirements typically range from 5% to 20% of the futures price, depending on the volatility of the underlying and the purpose of a given trade, whether for speculation or hedging. Since the use of a margin trade gives investors an access to high leverage, volatility of the derivative contract is naturally much greater than that of its underlying.

In other words, a margin requirement is the percentage of marginable securities that an investor (account holder) covers with his/ her own money. This requirement consists of initial margin requirement and maintenance margin requirement. Depending on an exchange, the initial margin requirement for stocks may vary and the maintenance margin requirement may be fixed at a specific percentage (e.g., 30%). For certain securities, higher requirements for both types of requirement might be imposed. An initial margin requirement refers to the percentage of own funds that have to be deposited in the account when an investor opens a position.

When an investor holds securities bought on margin (buying on margin), in order to account for fluctuation in price, the minimum margin requirement for tradable stocks is set at a specific percentage (e.g., 30%), or the so-called maintenance margin requirement. When the account holder cannot maintain the equity portion above the maintenance margin requirement, the holder would receive a margin call from the broker/ brokerage firm.