A Margin Penalty may be applied if:
- The exchange increases the margin requirement after you take a position.
- Your hedged position changes (e.g., if you exit one part of a multi-leg strategy).
- For in-the-money (ITM) options, margin requirements additionally added near expiry.
Exchanges require traders to maintain the updated margin at all times. If your margin falls short due to market movement, or if you have an ITM option and do not pay the required loss amount or margin shortfall in time, then a penalty will be charged.