Under the USDC margin system, account maintenance margin (MM) is a key indicator for evaluating the risk level of your account. Liquidation will be triggered when the account MM rate hits 100%.
The liquidation process of USDC options differs according to the margin modes: regular margin and portfolio margin. Within the two margin modes, the parameters that affect account MM are also different. The calculation formulas are as follows:
Account MM Rate = Maintenance Margin/Margin Balance
Regular margin is based mainly on margin balance, initial margin, and maintenance margin. It determines an account’s risk of being liquidated.
When the account MM rate reaches 100%, a liquidation is triggered. Once liquidation occurs, the system will first liquidate the USDC Perpetual contract positions.
If the account MM rate still hits 100%, all short option positions will be liquidated to reduce the risk to your USDC Account.
Please note that long option positions will not be liquidated, as the maximum loss an option buyer may face is the cost of buying an option — i.e., the premiums paid and trading fee.
Portfolio Margin (Temporarily unavailable)
Account MM Rate = Maintenance Margin/Equity
Equity = Margin Balance + Option Market Value
Note: Traders can use the account maintenance margin and account initial margin (IM) to evaluate the account risk.