Span Margin Exposures

The abbreviation for SPAN is Standard Portfolio Analysis. It can be defined as a leading margin system adopted by a vast number of futures and options exchanges.
A particular group of algorithms administers the operation of SPAN. The algorithms examine and assess the entire portfolio of a trader's account to find out the one-day risk for that particular account. Based on this analysis, a margin is determined and is named the SPAN margin in the share market terms.

What Is Exposure Margin And Span Margin?

Exposure Margin

In the Indian stock market, the exposure margin is always charged above the SPAN margin. Brokers have the freedom to set exposure margins accordingly. If any losses occur on days uncovered by the SPAN margin, the brokers will charge them. In stock trading, both the margins are equally important and need to be calculated in the correct manner.

SPAN Margin

SPAN margin is essential for the people who act as options and futures writers in the equity market need a perfect margin amount to cover their losses from this amount in their account. In the SPAN system, the one-day move is calculated based on the worst situation, and as a result, the margin is set for each and every position. Once this margin has been established with the help of algorithms, the extra margin present in current positions is effortlessly moved to either new positions or to those current positions that need extra margin. In the case of exposure margin, exchanges such as National Stock Exchange levy the MTM or exposure margin when they enter the derivative segment. Instead of using individual scripts, the base Portfolio system is used to calculate it as the Initial margin is also a part of this