What is Portfolio Margin?
Cross-margin, also known as portfolio margin, is a tool that allows traders to use their entire account equity across various positions with the same underlying as collateral, rather than assigning separate margin requirements for each individual position.
The advantage of cross-margining is that it can lead to lower overall margin requirements, as the system takes into account the potential offsetting of risks between different positions in a portfolio.
Portfolio margin (cross-margin) applies to stocks, futures, and options, and it allows you to design a trading strategy tailored to your preferences.
What is an Inter-Commodity discount?
Inter-commodity spread credit is applied when two assets with different underlying are correlated, thus offsetting the overall portfolio exposure. For instance, if there is a positive correlation between the prices of silver and gold, a discount is applied to opposing positions in these assets. This reflects the belief that potential losses in a long gold position can be partially offset by gains in a short position on silver. Consequently, a portfolio featuring a long position in silver and a short position in gold benefits from a reduced overall margin requirement.
Portfolio Margin and Inter-Commodity discounts are enabled by default for all EXANTE margin-trading accounts.