A share bought with cash cannot be taken from you by a price move. A leveraged stock perp can be closed by the venue without your say. Anyone coming to perps from shares or from long options needs that difference clear before anything else.
Margin and leverage
To open a perp position you post margin, a deposit in a stablecoin. Leverage is the size of the position divided by that deposit. Leverage of ten means the position is ten times the margin. A move of one tenth against it would then consume the whole deposit. Higher leverage shrinks that distance. Maximum leverage varies by market and is set by the venue.
What liquidation is
The venue will not wait for the deposit to reach zero. It requires a minimum cushion, the maintenance margin. When losses push the account below that cushion, the venue closes the position. That is liquidation. The price at which it happens is known the moment the trade is opened, and liquidation price and leverage math shows how it is worked out. The two margin levels are covered in initial and maintenance margin.
What is different on a stock
A share cannot trade on a Saturday, so a shareholder’s position cannot be marked down on a Saturday. A stock perp trades all weekend. Its price can reach a liquidation level at an hour when the stock itself has not traded. The position is closed against the perp’s own market, in whatever depth exists then.
Stocks also jump on scheduled news. An earnings report arrives after the close and the share reprices at once. A perp on that name trades through the announcement. A leveraged position on the wrong side can be liquidated in the minutes after the report, before the cash market has opened.
A liquidation is permanent
Being right later does not help. If the price touches the liquidation level and then recovers, the position is already gone. An option buyer in the same spot would still hold the option. A shareholder would still hold the share. This is why position size and leverage matter more on a perp than the view does.
Liquidations also feed on each other. A forced sale pushes the price down, which reaches the next trader’s level. Thin weekend books make that easier. The mechanics are in oracle marks and liquidation cascades.
What the numbers can and cannot show
Open interest tells you how much is open on a market. It does not tell you how leveraged those positions are or where their liquidation levels sit. A fall in open interest during a sharp move is consistent with positions being closed, by choice or by force. It does not prove which.
NoVo places no trades and holds no positions. The Stocks On-Chain tab of the Crypto Market Map shows each stock perp’s open interest and its change, so a reader can see when positions are leaving a market.