Deribit is operating with an incremental auto-liquidation system. This means that as soon as an account does not have enough equity to maintain its positions, (as assessed by the risk engine) a small part of the position will be closed in the market at market prices. At this moment the liquidation orders sent to the market are up till 200 future contracts of $10 each and 1 option contract on 1BTC per step. This happens in real time at a speed of 20 rounds per second, such that the maintenance margin of an account can only be higher than the margin balance of an account for a fraction of a second. (provided there is a liquid market that makes it possible to liquidate at all). As soon as maintenance margin is again lower than equity, liquidation will stop.
The system would first liquidate future positions and after that liquidate any option positions, in such a way that the risk of the position will be reduced. (basically striving for a “delta neutral” position where possible). There are circumstances possible where options would get liquidated first, where options delta’s are bigger and opposite direction than all other delta’s on the platform.
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