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Market Intelligence › Basic Terminologies
What the two margin components mean and why they keep changing through the day
Published by The Retail Trader · JUL 26, 2026 · Derivatives (F&O)
The money blocked when you take an F&O position is not one number but the sum of two parts. Each measures something different, and both can change during the day.
SPAN margin is what is demanded to cover the worst one-day scenario for a portfolio. It comes out of a risk model, so it rises automatically when volatility rises.
Exposure margin is an extra cushion on top of that. It is applied roughly like a flat percentage and covers the gaps in SPAN.
Margin is not a fixed number, and the reasons are these:
• When volatility rises, the risk model demands more margin.
• Near expiry, delivery margin starts being added in stock derivatives.
• A hedged position needs less margin — the moment you remove the hedge, it rises immediately.
• The exchange can also impose a special margin ahead of an event.
Keeping only enough money in the account for the position to "just fit" is a risk — not of the position, but of the process. The moment margin rises, a shortfall is created, and its consequence is a penalty or a forced square off, both at a bad time.
This article is educational only — it is not a buy or sell recommendation, it makes no claim of guaranteed returns, and it is not advice. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.