A variation margin is the mark to market cash movement used to account for the unrealized gain or loss resulting from market fluctuations. When you calculate the variation margin amount, the system updates the appropriate accounts in the ledger with the delta. You can calculate a variation margin for futures and options, as well as for exchange cleared interest rate swaps, credit default swaps, and credit index swaps. For futures and options, the margin amount is based on the value that is specified at the security level in the Variation Margin Rule field on the Future Contract and Option Contract panels. You must then approve the variation margin that was calculated. Once approved, the system generates the mark to market cash movements necessary for settlement.
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