What Is a “Margin Call” and Why Is It a Risk for Naked Option Writers?
A margin call is a demand from a broker for a client to deposit additional funds or securities to bring their margin account back up to the required maintenance level. For naked option writers, this risk arises when the underlying asset moves against their position, causing the potential loss to increase rapidly.
Failing to meet a margin call can result in the broker forcibly liquidating the position.
