Effects on Margin of Limit Moves
Chapters in this video
- 0:00 Performance bond defined: good-faith deposit, never a loan
- 1:02 Volatility shock absorber: margin and limits rise together
- 2:08 Trapped in a locked market: no offset possible
- 3:12 The margin call chain: four exam-tested steps
- 4:14 Exam traps and gotchas: margin is protection, not penalty
- 4:38 Rapid-fire exam recap
What this video covers
- What a performance bond (futures margin) actually is: a good-faith deposit and performance guarantee, never a loan or partial payment
- Why exchanges raise margin requirements and expand price limits together during sustained limit moves, not separately
- How a locked market traps a trader on the wrong side, preventing any offset while losses continue to accumulate
- The four-step causal chain the exam uses: limit move, locked market, inability to offset, then raised margin and expanded limit together
- Why raising margin is a collateral cushion for trapped exposure, not a penalty or punishment for the trader
- What happens when a locked trader's account falls below maintenance: margin call, then forced liquidation at potentially unfavorable prices once trading resumes
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 3 course also includes adaptive practice questions and spaced-repetition flashcards, free through the end of 2026.