How Does the Concept of ‘Margin’ Apply When Using Stablecoins for Options?

Margin is the collateral deposited by a trader to cover potential losses in a derivatives position. When stablecoins are used, they serve as the margin, ensuring the broker or smart contract has sufficient funds to cover potential negative price movements.

Since stablecoins are non-volatile, the required margin is less prone to fluctuation than if a volatile cryptocurrency were used, simplifying risk management.