Portfolio Margin mode is a sophisticated account feature that allows traders to manage spot, margin, perpetual swaps, futures, and options within a single, unified account. It employs a risk-based model to determine margin requirements, potentially reducing the total margin needed by considering the combined risk of all positions. This approach enables efficient capital use while maintaining effective margin coverage.
Similar to multi-currency margin mode, a user's equity in various currencies is converted into an equivalent USD amount. This USD value serves as the margin for placing orders and holding positions across the portfolio.
Understanding Portfolio Margin Eligibility
To qualify for Portfolio Margin mode, users must meet two key criteria:
- Maintain a minimum net equity of $10,000 USD.
- Declare that they have a sufficient understanding of the Portfolio Margin concept and its associated risks.
How Risk Offsetting Works in Portfolio Margin
OKX's Portfolio Margin system offers two distinct modes for calculating risk and margin:
Derivatives-Only Mode
In this mode, all derivatives—perpetual swaps, futures, and options—are grouped into "risk units" based on their underlying asset (e.g., BTC-USD, ETH-USDT). Instruments within the same risk unit are considered holistically, allowing for risk-offsetting between them. For example, a long futures position and a short perpetual swap on the same underlying could offset each other's risk, lowering the overall margin requirement. Note that crypto-margined and USDT-margined contracts are considered separate risk units.
Spot-Derivatives Risk Offset Mode
This advanced mode incorporates spot holdings into the risk unit calculation. This can significantly lower margin requirements if derivative positions are effectively hedged with spot assets. Users can choose which type of risk unit to allocate their spot holdings to:
- Spot-derivatives (USDT) risk offset mode: Underlying spot assets are placed into USDT-margined risk units.
- Spot-derivatives (USDC) risk offset mode: Underlying spot assets are placed into USDC-margined risk units.
- Spot-derivatives (Crypto) risk offset mode: Underlying spot assets are placed into crypto-margined risk units.
The default mode for new users is typically the Spot-derivatives (USDT) risk offset mode. Users can switch between modes or adjust their derivatives-type settings at any time. The "Spot in use" quantity, visible on the trading interface, indicates how much spot is actively being used for hedging within the risk units.
The Calculation of Portfolio Margin
The system calculates margin on a per-risk-unit basis, simulating the maximum potential loss of the portfolio under various market conditions.
Maintenance Margin Requirement (MMR) is the estimated amount needed to maintain positions under adverse conditions. The USD value of each risk unit's MMR is summed to create the total portfolio MMR.
Initial Margin Requirement (IMR) is then derived from the MMR and represents the collateral needed to open new positions.
Determining "Spot in Use"
Under the spot-derivatives risk offset mode, the amount of spot used for hedging ("spot in use") is determined by the net delta of the derivatives in the same risk unit. Spot is only added to the calculation if it can effectively hedge the derivatives.
Portfolio Margin Components
The total portfolio margin is the sum of the derivatives margin and the borrowing margin. The derivatives margin itself is calculated as the minimum value from several complex scenarios that test the portfolio under different market conditions (positive delta open orders, negative delta open orders, and holding positions only).
The final calculation is:MMR = Derivative MMR + Borrowing MMRIMR = 1.3 * Derivative MMR + Borrowed IMR
This calculation incorporates several risk measures (MR1-MR8) designed to stress-test the portfolio:
- MR1: Spot Shock: Simulates large price moves and changes in implied volatility.
- MR2: Theta Decay Risk: Measures the loss from time decay on options over 24 hours.
- MR3: Vega Risk: Captures risk from changes in implied volatility across different option expiries.
- MR4: Basis Risk: Arises from price differences between contracts with different expiration dates.
- MR5: Interest Rate Risk: Measures the impact of changes in the yield curve on option pricing.
- MR6: Extreme Move: Tests the portfolio against exceptionally large price movements.
- MR7: Minimum Charge: Covers potential transaction costs and slippage during liquidation.
- MR8: Borrowing Margin: Calculates the margin required for any borrowed funds or negative equity.
The margin ratio, a key health metric for the account, is calculated as:(USD Value of Portfolio Equity) / (USD Value of Margin Required)
👉 Explore advanced margin calculation tools
Testing Portfolio Margin with a Simulator
A powerful simulation tool is available for users to test how their existing or hypothetical portfolios would perform under Portfolio Margin mode. This allows traders to:
- Build simulated portfolios with new positions.
- Combine existing positions with simulated ones to see the overall impact.
- View the estimated IMR and MMR for the proposed portfolio.
- See a detailed breakdown of the MMR by risk type (MR1-MR8) to understand the main drivers of their margin requirement.
The Liquidation Process in Portfolio Margin
Liquidation is triggered when the account's margin ratio falls to 100%. Due to the complexity of multi-asset portfolios, the liquidation process is a multi-step, risk-based approach designed to stabilize the account with minimal market impact.
- Dynamic Hedging (DDH): The system may open new perpetual swap or futures positions to hedge against the greatest risk in the portfolio (e.g., delta risk from options).
- Basis Hedge Process: If basis risk is the largest concern, the system will liquidate futures contracts with different expiries to reduce this specific risk.
- General Position Reduction: If the account is still at risk, the system begins liquidating positions. It prioritizes the most liquid instruments and those whose closure would most effectively reduce the overall maintenance margin requirement. This continues tier-by-tier until the account's margin ratio returns to a safe level (above 110%).
Frequently Asked Questions
What is the main advantage of Portfolio Margin mode?
The primary advantage is capital efficiency. By netting the risk of offsetting positions across spot, swaps, futures, and options, the total margin requirement is often significantly lower than in isolated margin modes, freeing up capital for other opportunities.
Who is eligible for Portfolio Margin?
This mode is designed for experienced traders. Eligibility requires a minimum account equity of $10,000 USD and a declared understanding of the associated risks and complex mechanics of the system.
Can I test Portfolio Margin before switching?
Yes, a comprehensive portfolio simulator is available. It allows you to model both existing and hypothetical positions to see your potential margin requirements and risk exposure before making any changes to your live account.
How does liquidation work differently in this mode?
Instead of immediately closing positions, the system first attempts sophisticated hedging strategies to reduce the portfolio's overall risk profile. This can involve opening new positions to hedge existing ones. Only if these measures fail does it proceed to a traditional liquidation of assets.
What are the different risk offset modes?
The two main modes are Derivatives-Only (groups only derivatives by underlying) and Spot-Derivatives (includes spot holdings in the risk calculation for enhanced hedging). Within the spot-derivatives mode, you can choose to allocate spot to USDT, USDC, or crypto-margined risk units.
Where can I find a detailed breakdown of my margin requirements?
The portfolio simulator provides the most detailed view. By hovering over the MMR figure in the simulator, you can see a breakdown of how much each risk type (spot shock, vega risk, basis risk, etc.) contributes to your total maintenance margin.