How Does Margin Requirement Relate to Selling Crypto Options?
When selling (writing) crypto options, a margin requirement is typically imposed by the exchange, especially for "naked" positions (uncovered calls or puts). Margin is a form of collateral that the seller must deposit to cover potential losses.
The margin amount is calculated based on the option's risk profile, the underlying asset's volatility, and the exchange's risk parameters. It ensures the seller can fulfill their obligation if the option is exercised against them.
