What Action Can a Writer Take to Reduce the Margin Requirement on an In-the-Money Naked Call? ▴ Learn

What Action Can a Writer Take to Reduce the Margin Requirement on an In-the-Money Naked Call?

The writer can reduce the margin requirement by converting the naked call into a defined-risk spread, such as a bear call spread, by buying a higher-strike call option. This caps the maximum potential loss, which in turn lowers the broker's required collateral.

Alternatively, they can close the position entirely or deposit more cash.

What Is a “Bear Put Spread” and How Does It Limit Risk Compared to Buying a Single Put?

What Is a “Credit Spread” and How Does It Limit the Bearish Risk?

How Do Options with a Defined Risk Profile Affect Margin?

What Is the Primary Difference between Altcoin and Bitcoin Market Correlation in a Bear Cycle?