The execution of conditions on futures and options is carried out within a certain period. Therefore, there is a need to provide a guarantee for the transaction. The guarantee is the blocking of part of the funds in your account approximately 10% of the amount of your transaction for the duration of the transaction.
The guarantee obligation is charged by the exchange on both sides of the transaction and is a kind of insurance for the fulfillment of obligations by each of the parties to the agreement.
While the contract is not executed, the size of the GO may change. If there is a sharp jump in the value of the underlying asset, the amount of insurance will be increased or decreased depending on how the asset behaved.
If the trader, in addition to the blocked funds, does not have any money left in the account, the exchange will forcibly close his position and unlock the guarantee. This measure is used to reduce the risks of the exchange. Therefore, in order to conclude transactions with futures, a trader needs to have free money in the account to cover possible fluctuations in quotations.
When closing a position, the amount of the guarantee will be unblocked minus your losses, if any.
The volatility of options is more pronounced here. The different level of risk for the seller and the buyer contributes to the fact that the size of the guarantee for them will vary significantly.
The buyer risks only the amount of collateral, so the value of the GO will be approximately equal to the value of the option. The seller’s risk is theoretically unlimited. Therefore, the amount of the guarantee for it has been significantly increased, but there cannot be more than the maximum limit – the guarantee of the futures.
The Moscow Exchange uses “batch margin” to calculate the guarantee amount.
When working in Quick software, you can always see the size of the GO when you open the application entry window. In general, you should not be afraid of GO if you do not sell PUT or CALL options in pure form. It is enough to simply use no more than 50% of your account to make a transaction.