Portfolio margin accounts hit by auto-deleveraging (ADL) will see impacts on option positions, and the mechanism is far more complex than that for regular perpetual contracts — because option Delta is dynamic. The key difference is that the ADL trigger logic for portfolio margin accounts is different from regular trading accounts: the system will first try to close Delta hedging positions, instead of liquidating your options directly.
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Which Position Will Be Closed First During ADL
When a portfolio margin account triggers forced deleveraging, the system prioritizes "Delta hedging position reduction", meaning it closes the perpetual or delivery positions you use to hedge option exposure, to lower the overall account risk.
This order of operations for option positions means:
| Step | System Operation | Impact On Option Positions |
|---|---|---|
| Step 1 | Close perpetual/delivery hedging positions | Options lose hedging protection and turn into naked positions |
| Step 2 | If risk is still not resolved, start reducing option positions | Option positions may be closed at unfavorable prices |
This order has caused losses for many market makers in real markets: during the October 2025 liquidation cascade, some market makers had their hedging legs liquidated by ADL, leaving their remaining option positions exposed to one-sided market swings, which magnified their total losses.
Why Option Positions Are More Vulnerable In ADL Events
1. Delta is dynamic
The Delta of perpetual contracts is always 1, but the Delta of options changes as the underlying asset price moves. ADL usually happens during periods of extreme market volatility, when option Delta is shifting rapidly, bringing higher uncertainty for the system to calculate which position to close first.
2. Portfolio margin hedging does not equal ADL protection
The core advantage of portfolio margin mode is that positions in opposite directions can offset each other's required margin, to improve capital utilization efficiency.
But the ADL trigger threshold is calculated based on the entire account's margin ratio — when the total account risk rises too high, your hedging positions will no longer "protect" you, the system will force close part of them to cut risk.
3. Options have poorer liquidity
When perpetual contracts are hit by ADL, there are usually still available counterparties. But under extreme market conditions, options often have almost no order book depth. When ADL executes at bankruptcy price or mark price, the slippage for options is usually much larger than that for perpetual contracts.
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Verification Method After ADL Completes
After you finish checking your account status, go to your order history to find the closed positions, and check if the record is marked as "ADL" or "Forced Deleveraging". Pay extra attention to the type and quantity of closed positions: if the closed positions are your perpetual hedging legs instead of the options themselves, that means your option positions are still held, but they have turned into naked positions, so you need to re-assess your risk exposure immediately. If you want to lower the risk of your option positions getting hit by ADL, you can appropriately control the overall leverage level of your account, and avoid keeping your account in high-risk status for long periods.
