What Is a “Margin Requirement” for Writing Options?
A margin requirement is the amount of collateral (cash or securities) that an option writer must deposit and maintain in their brokerage account to cover potential losses. Since writing naked options carries significant risk, the broker requires margin to ensure the writer can meet their obligations if the option is exercised against them.
The requirement varies based on the underlying asset and the specific strategy.
Glossar
Writing Naked Options
Action ⎊ Writing Naked Options is the high-risk trading action of selling a call or put option contract without holding the corresponding underlying cryptocurrency or an offsetting derivative position.
Margin Requirement
Collateral ⎊ Within cryptocurrency derivatives and options trading, collateral represents the assets pledged by a trader to cover potential losses arising from leveraged positions.