Skip to main content
Directional collateral return is a portfolio margin optimization that reduces your margin requirement when you hold offsetting positions in instruments from the same directional event.

​
What Are Directional Events?

Directional events have multiple instruments with ordered strike levels where outcomes are logically linked. If a higher threshold is true, all lower thresholds must also be true. Examples include:
  • Point spreads: Will the team win by more than 3.5? More than 6.5? More than 10.5?
  • Totals: Will the combined score exceed 40.5? Exceed 47.5? Exceed 50.5?
Each instrument has an ordinal rank (rank 1 = lowest threshold). If rank 3 resolves Yes, then ranks 1 and 2 must also resolve Yes.
Whether an event is directional is a property of how the exchange lists it, not of the question. Sports spread and total ladders are listed as directional events. Crypto Above/Below and One-Touch ladders are currently listed as independent events and do not receive directional collateral return; crypto Price Range ladders are mutually exclusive events and receive Mutually Exclusive Collateral Return instead. See Crypto Schema.

​
How Collateral Return Works

When collateral return is enabled on your account and you hold a lower-ranked long position that offsets a higher-ranked short position in the same directional event, your margin requirement is reduced. Consider a spread ladder on one NFL game with three instruments, each paying out if the Chiefs win by more than the stated margin. The neg- symbols are the Chiefs laying points: neg-3pt5 is the Chiefs at -3.5, so the larger the number, the harder the question and the higher the rank. If the Chiefs win by more than 10.5, they also won by more than 6.5 and 3.5. This directional relationship is what enables collateral return. Without Collateral Return:
  • long 3 contracts of asc-nfl-kc-phi-2026-02-09-neg-3pt5
  • short 2 contracts of asc-nfl-kc-phi-2026-02-09-neg-6pt5
  • Margin requirement: 2 (full short position)
  • Buying power reduced by 2
With Collateral Return:
  • long 3 contracts of asc-nfl-kc-phi-2026-02-09-neg-3pt5
  • short 2 contracts of asc-nfl-kc-phi-2026-02-09-neg-6pt5
  • Margin requirement: 0 (short fully offset by lower-ranked long)
  • Buying power: no reduction

​
Why This Matters

Your long position at the lower threshold guarantees a payout in any scenario where your short position at the higher threshold loses. If the Chiefs win by more than 6.5 (your short loses), they also won by more than 3.5 (your long wins), so the long payout covers the short’s loss. Maximum loss calculation:
  • Chiefs win by 3.5 or less, or lose: Long loses, short wins = net depends on entry prices
  • Chiefs win by more than 3.5 but not more than 6.5: Both positions win
  • Chiefs win by more than 6.5: Long wins, short loses - but long payout offsets short loss
The exchange recognizes this natural hedge and reduces your margin accordingly.

​
Directionality Matters

Only a lower-ranked long can offset a higher-ranked short. The reverse does not work.
  • long asc-nfl-kc-phi-2026-02-09-neg-3pt5, short asc-nfl-kc-phi-2026-02-09-neg-6pt5 - collateral return applies
  • long asc-nfl-kc-phi-2026-02-09-neg-6pt5, short asc-nfl-kc-phi-2026-02-09-neg-3pt5 - NO collateral return
This is because winning by more than 6.5 guarantees winning by more than 3.5, but failing to win by more than 3.5 tells you nothing useful - the 6.5 threshold already failed too, so there’s no offset.

​
Multiple Offsets

A single lower-ranked long position can offset multiple higher-ranked short positions. Using the same ladder with more thresholds:
  • long 10 contracts of asc-nfl-kc-phi-2026-02-09-neg-3pt5
  • short 2 contracts of asc-nfl-kc-phi-2026-02-09-neg-6pt5
  • short 3 contracts of asc-nfl-kc-phi-2026-02-09-neg-10pt5
  • short 6 contracts of asc-nfl-kc-phi-2026-02-09-neg-13pt5
  • Total short: 11, Collateral return: 10 (2 + 3 + 5 from remaining long)
  • Margin requirement: 1
Multiple long/short pairs across different ranks can offset simultaneously. The exchange matches the highest-ranking short with the highest available long first, working down.

​
Using Freed-Up Buying Power

Freed-up buying power can be deployed into other markets (different events). This allows for more efficient capital utilization across your entire portfolio. However, you cannot use this freed-up buying power to increase your position in the same directional event that generated the collateral return.

​
Closing Offsetting Positions

When you close one of the offsetting positions, you must “return” the collateral that was freed up. Example:
  • You are long 3 contracts of asc-nfl-kc-phi-2026-02-09-neg-3pt5, short 2 contracts of asc-nfl-kc-phi-2026-02-09-neg-6pt5 (collateral return of 2)
  • You use that freed buying power to trade in a different market
  • If you try to sell your long position, you must return the collateral
  • If that buying power is already deployed elsewhere, the order will be rejected
Hypothetical collateral return from new orders is not factored into buying power checks. The exchange only considers your current positions when calculating collateral return.

​
Key Points

  • Collateral return applies to directional events where lower thresholds must be true if higher ones are
  • A lower-ranked long offsets a higher-ranked short (not the reverse)
  • One long position can offset multiple short positions across higher ranks
  • Freed-up buying power can be used in other markets, not the same event
  • Closing offsetting positions requires returning the freed collateral
  • This is a portfolio margin optimization, not a reduction in actual risk