How Does the Margin for a Short Put Option Differ from a Short Call Option?
The margin for a short (uncovered) put option is calculated based on the potential loss if the underlying asset price drops to zero. The margin for a short (uncovered) call option is calculated based on the potential loss if the underlying asset price rises indefinitely.
Both require margin to cover the substantial or unlimited risk.
Glossar
Short Put
Position ⎊ A Short Put represents a bullish or neutral market position established by an options seller, or writer, who receives a premium in exchange for accepting the obligation to purchase the underlying cryptocurrency asset at a specified strike price.
Underlying Asset Price
Valuation ⎊ The underlying asset price in cryptocurrency derivatives represents the current market consensus of an asset’s worth, serving as the foundational input for pricing options and futures contracts.
Short Call
Position ⎊ A Short Call represents a market position established by an options seller, or writer, who receives a premium in exchange for undertaking the obligation to sell the underlying cryptocurrency asset at the specified strike price.
Short Put Option
Obligation ⎊ Writing a put option creates a contingent liability for the seller, representing the obligation to purchase the underlying cryptocurrency at the strike price upon exercise by the buyer.