Standardized Portfolio Analysis of Risk Margin. A system of determining the appropriate amount of
margin on an
option or
futures trader's account in order to cover potential
losses from his/her
trades. Options and futures traders are required to maintain a certain margin on their positions to reduce the
risk of
failing to
settle. The SPAN margin uses a complex system of algorithms to calculate the margin for each
position that a trader holds and transfer excess margin from some positions to cover the margin that is lacking for others. Most options and futures
exchanges require their traders to use the SPAN margin.