Liquidation Process (Options)

Within the USDC margin system, your account’s maintenance margin is a key indicator for assessing your account’s risk level. When the account maintenance margin rate reaches 100%, the forced liquidation will be triggered.

The liquidation process of USDC options is different for the two margin modes of regular margin or combined margin. In the two margin modes, the parameters that affect the account maintenance margin are also different. Calculated as follows:

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Regular Margin

Account Maintenance Margin Rate = Maintenance Margin / Margin Balance

The regular margin is mainly based on the margin balance, initial margin and maintenance margin, which determines the risk of forced liquidation of the account.

When the account maintenance margin rate reaches 100%, the forced liquidation will be triggered. Once a liquidation occurs, the system will first liquidate the USDC perpetual contract position and then liquidate the option position.

If the maintenance margin in the account still reaches 100%, all short option positions will be liquidated to reduce the risk of your USDC account.

Note that the biggest loss an option buyer can face is the cost of buying the option — the premium and transaction fees paid, so long option positions cannot be liquidated.

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Portfolio Margin (temporarily not supported)

Account Maintenance Margin Rate = Maintenance Margin / Equity

Equity = Margin Balance + Option Market Value

Note: Traders can use the maintenance margin and initial margin in the account to assess account risk.

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