Lyra supports two margin systems: Standard Margin, which offers simple risk management and is the default when creating an account, and Portfolio Margin. Learn more about Portfolio Margin here.
What is Standard Margin?
Standard Margin determines your margin requirements for each position in isolation, except for option spreads with the same expiry, whose margin is offset.
The calculation has two steps:
Step 1: Calculating the margin requirements for the perpetuals and/or options:
Perpetual Margin: The margin requirements for perpetuals are calculated by taking a percentage of the perpetual price.
Option Margin: The margin requirements for short options are calculated by the option's mark price and a percentage of the spot price. Long options don't contribute any margin offset, except if they are part of a spread with the same expiry (for an example, see ‘’Benefits’’ below).
Step 2: After calculating the perpetual and/or option margin, the value of the USDC and base assets are added:
USDC: This is the USDC balance, which can be positive or negative. For more details, see Borrowing & Lending.
Base Assets (with a risk-based haircut): This is the discounted value of all the base assets.
If the maintenance margin is positive, the account is not subject to liquidation. If the initial margin is positive, the user may add positions.
Note that the description above is simplified. For more details, see the documentation.
When should you use Standard Margin?
Traders should use Standard Margin when they want simple margin rules, access to all markets, and support for cross-asset collateral.
Benefits:
Supports trading on all options and perpetual markets in one subaccount, unlike Portfolio Margin which requires separate subaccounts for each market.
Cross-asset collateral. Users can deposit various base assets to collateralize their perpetuals and options positions. For example, you can use WBTC as collateral to sell ETH call options or collateralize BTC perpetuals with ETH.
Capital-efficient option spreads, as the margin requirements will be capped at the maximum loss. For example, if you are long an ETH $3500 Call and short an ETH $3800 Call with the same expiry (’Long Call Spread’), the margin requirements will be $0. If you are short an ETH $3500 Call and Long an ETH $3800 Call with the same expiry (’Short Call Spread’), the margin requirements will be $300.
Considerations:
Limited capital efficiency. By margining positions in isolation, Standard Margin is less capital efficient than Portfolio Margin. For instance, if you have a balanced portfolio with risk-reducing or hedged positions, a Portfolio Margin subaccount would offer better capital efficiency as it evaluates your portfolio holistically rather than each position in isolation.
For more details about Standard Margin, see the documentation.