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How Does the Margin Requirement Differ for Buying versus Selling Options?

When buying an option (long position), the margin requirement is typically the full premium paid for the contract. This is because the maximum loss is inherently limited to that premium.

When selling an option (short position), margin is required as collateral to secure against potential losses, which can be unlimited for naked calls. The margin for selling is a percentage of the underlying value plus the premium.

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