When you open a position at a price that differs significantly from the current Mark Price, Everstrike requires additional position margin to cover the gap between your fill price and the Mark Price. This extra requirement is called Mark Price Compensation, and it scales directly with how far from the Mark Price your order was filled.
How the Adjustment Works
Mark Price Compensation increases your Minimum Initial Margin requirement by the same percentage as your distance from the Mark Price. If you trade 1% away from the current Mark Price, your Minimum Initial Margin requirement doubles from 1% to 2%:
In this example, the 1.00% added to the base requirement equals exactly your distance from the Mark Price. If you traded 2% away, the adjustment would add 2.00%, and so on.
The adjustment is applied to your Weighted Average Fill Price relative to the Mark Price at the time of the fill. If a large order fills across multiple price levels, the compensation is based on the blended average of those fills.
This requirement protects you from immediate liquidation. Without it, a position opened 1% away from a 1% Minimum Initial Margin requirement would have zero margin buffer the moment it was filled — and could go bankrupt instantly on any small adverse move.
