What is Max Buying Power?

What is Max Buying Power?

Maximum Buying Power is the money that you can utilize to purchase options. However, it is not your free margin or your cash balance. Since, unlike stocks, you can buy options on margins i.e., borrow money to purchase options, your buying power will depend on the margin setup.

You Maximum Buying Power will also be affected by Margin requirements such as Maintenance Margin on the trade entered. New Positions entered and Current market value of your trades also influence your maximum buying power

You can check your Max Buying Power by going to the Portfolio Tab from the Density Exchange website. The Current Status table shows your Max Buying Power among various other details.

Accordingly, your maximum buying power is the maximum amount of money that can be borrowed to buy options

You can calculate your Maximum Buying Power as follows:

Maximum Buying Power = Free Margin x Maximum Leverage available.

As a user, your maximum buying power shall increase or decrease if you decide to increase/decrease your leverage. It is to be noted that the maximum leverage available on the Density Exchange Platform is 10, considering the considerable risk futures trading possess.

For example, Sam has USDT 400 as his Free margin balance and the maximum leverage available to him is 10. Accordingly, his Max Buying Power is USDT 4,000.

However, your Max Buying Power will change if you have undertaken any Open Orders, Open Orders are orders that have not been executed yet. Continuing the above example, if Sam enters into a long position purchases BTC worth USD 2,000 using up margin of USD 500 (4x Leverage) but the orders has not been executed yet, then the Max Buying Power will reduce by such amount.

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