Variation margin is which of the following?
A)margin deposited as a result of marking-to-market
B)the difference in margin between hedger and speculator
C)margin differences according to trading style
D)margin set by the variability of a futures price
E)none of the above

Question

Quizplus · Accepted Answer

Variation margin is the margin deposited as a result of marking-to-market. This means that if the market value of a futures contract changes, the party with the loss will need to deposit additional margin to cover the increase in the potential loss. The party with the gain will be able to withdraw margin. The process of marking-to-market occurs daily to ensure that there is enough margin to cover potential losses.

Variation Margin Is Which of the Following