What does SPAN Margin mean?
SPAN Margin or Standardized Portfolio Analysis of Risk is a margin system generally used by options and futures exchanges. SPAN uses a set of algorithms to determine the margin by assessing the total portfolio of a trader’s account.
Futures Knowledge Explains SPAN Margin
Options and futures traders are required to maintain a certain margin on their positions to reduce the risk of failing to settle and to cover potential losses. SPAN calculates the margin for each position that a trader holds and transfers excess margin from some positions to cover the margin that is lacking for other positions. SPAN margin uses one-day risk assessment method rather than a fixed percentage of margin.