What is funding liquidity risk?Funding Liquidity Risk

The risk of being forced to close a sound position because you can't raise cash in time (for example for a margin call); futures hedge losses are paid in cash daily, while gains on the hedged asset come later.

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Hedging Strategies
The Hidden Costs of Hedging: Rolling and Margin
Roll near-month futures to hedge for a whole year and the price risk is locked on paper, but every roll costs money and margin needs cash. A hedge can also die from cash flow.

Related terms

margin
mark-to-market
contango
backwardation
roll
roll yield

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