How Does Margining Work for Institutional Cryptocurrency Options?

Institutional margining for crypto options involves posting collateral to cover potential future losses. This is typically done through a prime broker or a clearing house.

Initial margin (IM) is required upfront to open a position, calculated using risk models like SPAN or proprietary methods, considering volatility and portfolio composition. Variation margin (VM) is exchanged daily (or more frequently) to cover mark-to-market losses.