What is margin requirement for Futures?

Initial Margin:

The initial margin is the minimum cash required in your Futures account to open a Futures contract position. The initial margin is varies by contract. It is usually 3% - 12% of notional value of the contract. Brokers may require additional margins above the exchange minimums during volatile periods.

For example, for the E-mini S&P 500 (ES) Futures contract, the initial margin might be around USD 24,862, while for Micro E-mini S&P 500 (MES), it's lower at USD 2,486.

Maintenance Margin:

Maintenance margin is the minimum amount that must be maintained in the account to keep the position active. The maintenance margin is less than the initial margin requirement, typically 90% of the initial margin and ensures ongoing coverage against losses. The maintenance margin varies based on the positions held in the account.

Margin call:

If your net account value falls below the maintance margin due to losses or volatility, you will receive a margin call. This means you will need to either deposit more funds into your Futures account to bring your Net Account Value back up to the required margin level (Initial Margin Requirement) or reduce your position(s) in part or in whole to meet the margin requirement level - often the same day. Failure to meet it restricts new positions and may lead to forced liquidation.

Liquidation:

If margins are not restored, the broker can liquidate positions to cover deficits. Webull typically liquidates if your net account value has dropped below forced liquidation margin requirement. For physical delivery contracts, positions may be closed early to avoid delivery risks. This process is automatic and can occur at unfavorable prices, amplifying losses.