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SPAN What is the margin? Why is it important
Reading time: 5 minutes
SPAN Algorithm principle
SPAN = Standard Portfolio Analysis of Risk
Developed by the Chicago Mercantile Exchange (CME), it is the industry standard for global options margin calculations.
Core logic:
The margin is not simply calculated based on the nominal value, but based on the value at risk (VaR) model:
- Scan various possible change scenarios of the underlying price (different ranges of rise/fall)
- Calculate your portfolio profit and loss for each scenario
- Take several worst-case scenarios and calculate potential losses
- Margin = the amount required to cover these potential losses
To put it simply: SPAN counts "how much you may lose", not "how much you bought".
Why you need to estimate
Before opening a position:
- Know how much capital is involved in this transaction
- Properly plan positions to avoid excessive concentration
- Make sure you have enough cash to cover margin calls
Different brokers vary greatly:
| Broker type | Margin features |
|---|---|
| Traditional brokerage | Usually more conservative, adding buffering based on SPAN |
| Internet brokerage | May be more flexible, but policies change often |
| Margin Account vs Cash Account | The requirements are completely different |
The estimate of Hyperstock helps you know the approximate figure in advance without waiting for the brokerage system to display it.
Prediction capabilities of Hyperstock
Algorithm basis:
- Based on CME SPAN standard parameters
- Consider underlying price fluctuations, volatility changes, and time decay
- Optimization for individual stock options (simplified version of non-futures portfolio)
Accuracy:
- The actual margin gap with mainstream brokers (IB, Tiger, Futu) is usually within 10%
- A few highly volatile targets may have large deviations
limit:
- Different brokers have different policies, our estimates are not precise values.
- The net margin effect of portfolio positions is not fully considered
- Please refer to your brokerage’s actual requirements.
In the Hyperstock analysis results, the SPAN margin estimate is displayed directly. It's clear at a glance.
Practical suggestions
- Sell Put Check the margin estimate first to make sure the funds are sufficient
- The margin occupied by a single target ≤ 10% of the total funds
- Reserve 30% cash for margin calls
- In a high volatility environment (VIX > 25) brokers may increase margin requirements
⚠️ Risk reminder: SPAN The margin is an estimate, and the actual amount is subject to the requirements of the brokerage. Brokers may adjust margin policies at any time when the market fluctuates violently.