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In the world of finance, we often encounter terms like margin, especially in the context of futures contracts and options. But what exactly does this term mean? Simply put, margin refers to the amount of money that both the buyer and seller of a contract deposit to ensure that they fulfill their obligations under the contract. However, it's important to note that in commodities, margin is not a payment towards the equity or down payment on the actual commodity. Instead, it serves as a security deposit. This type of margin is further categorized into customer margin and clearing margin.
