Is There a Maximum Cap on Socialized Loss for a Single Trader?
Typically, the maximum cap on socialized loss for a single trader is their total profit (realized and unrealized) from the position(s) in question. While there may not be a fixed percentage cap, the system ensures that the deduction does not exceed the trader's total gains, preventing them from losing their initial capital.
Glossar
Cap
Strike ⎊ Cap, within cryptocurrency derivatives, denotes the predetermined price level at which an option contract ⎊ typically a call or put ⎊ may be exercised.
Socialized Loss
Mechanism ⎊ Socialized loss, within cryptocurrency derivatives and options trading, describes the distribution of losses across a broader participant base than those directly holding a losing position, often amplified by leveraged exposure and cascading liquidations.