> ## Documentation Index
> Fetch the complete documentation index at: https://docs.derive.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# SM v PM Comparison

A comparison of Standard Margin (SM) and Portfolio Margin (PM), which can be used to determine which type is more favorable for which strategies or portfolios.

In general, PM is more capital-efficient for hedged or complex portfolios, while SM is more favorable for simple long call or put spreads with the same expiry or directional perp strategies.

Both managers now live inside a risk universe, so both are limited to the currencies and collateral that universe lists. The headline difference from V2 is that **portfolio margin is no longer restricted to a single market**.

|                                | **Standard Margin**                                                                                                                                   | **Portfolio Margin**                                                                                                                                                                                                                               |
| ------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **Margin calculation**         | Each position assessed in isolation (except same-expiry spreads)                                                                                      | Holistic portfolio assessment across 23 regular scenarios, a tail ladder and four skew rails; margin = worst loss + contingency margin                                                                                                             |
| **Capital efficiency**         | Lower generally, but optimal for defined-risk spreads (long call/put spreads capped at max loss)                                                      | Up to 10x more efficient for complex or hedged portfolios                                                                                                                                                                                          |
| **Markets per subaccount**     | All options and perpetual markets in the subaccount's universe                                                                                        | All options and perpetual markets in the subaccount's universe (e.g. ETH *and* BTC in Prime) — but each currency's worst-case loss is charged separately, so gains in one do not offset losses in another                                          |
| **Cross-asset collateral**     | Supported for every token the universe accepts (e.g. use cbBTC to collateralize ETH options)                                                          | Supported for every token the universe accepts                                                                                                                                                                                                     |
| **Borrowing base assets**      | Supported                                                                                                                                             | Supported                                                                                                                                                                                                                                          |
| **Same-expiry option spreads** | Margin capped at max loss and very efficient for long call/put spreads                                                                                | Reflected in shock scenarios but no dedicated spread offset rule                                                                                                                                                                                   |
| **Complexity**                 | Simple, beginner-friendly rules                                                                                                                       | Complex and may be harder to understand for beginners                                                                                                                                                                                              |
| **Best for**                   | • Buying call or put spreads<br />• Beginners wanting straightforward margin rules<br />• Portfolios dominated by one or two isolated short positions | • Complex multi-leg strategies with offsetting risk (straddles, condors, delta-hedged positions)<br />• Active perp traders holding options as hedges<br />• Traders running several markets inside one universe and maximizing capital deployment |
| **Risk-cancelling collateral** | No. Collateral is credited by a flat haircut factor only.                                                                                             | Yes, for the base collaterals of the currencies the universe hosts (e.g. ETH, weETH and wstETH against ETH; cbBTC and LBTC against BTC; kHYPE against HYPE).                                                                                       |
| **Settled expiries**           | Charged at the realized payoff, floored at zero                                                                                                       | Charged at the realized payoff; no scenario is run on a settled expiry                                                                                                                                                                             |


## Related topics

- [Common Parameters](/common-parameters-parameters-that-are-not-specific-to-one-margin-engine-listing-and-settlement-limits-the-oracle-feeds-both-engines-read-and-the-fees-charged-on-trading-and-on-account-creation-per.md)
- [Migration skill for your coding agent](/migrating/breaking-changes.md)
- [Liquidations](/liquidations.md)