Margin is smaller than exposure | Canvas of Knowledge

Two different amounts

Market exposure describes the value represented by a position. Margin is the collateral required to support it. In futures markets, the CFTC describes margin as a performance bond rather than a payment towards purchasing the commodity. Posting a smaller deposit does not reduce the number of ounces affected by a change in price. The exposure and the deposit answer different questions about the same position.

Build a hypothetical position

Imagine a simple long position representing 100 troy ounces at $30 per ounce. Its notional exposure is 100 × $30 = $3,000. Suppose, purely for illustration, that a $300 deposit supports this exposure. The ratio of exposure to deposit is then 10 to 1. Neither the quantity nor the deposit in this example specifies an actual exchange contract, broker requirement or available product.

Follow a one-dollar fall

If the hypothetical price falls from $30 to $29, the loss is 100 × $1 = $100 before costs. Against the $300 deposit, that is one third, or approximately 33.3%. Assuming no other cash flows, account equity falls to $200. The position's notional value has fallen by about 3.33%, but its dollar loss is measured against a much smaller deposit. The same multiplier applies to favourable moves.

Requirements can change

CME distinguishes the initial margin required to open a position from the maintenance level needed afterwards. A fall below maintenance can require additional funds. Requirements vary with the product, market conditions and intermediary; the $300 assumption provides no information about those thresholds. It therefore cannot establish whether this example would trigger a margin call. The CFTC also explains that futures losses can exceed the amount initially deposited.

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Sources & further reading

Sources checked 14 November 2026. Reference organisations do not endorse this website. Price examples are hypothetical and educational.