What Is the Term for the Collateral an Option Writer Must Post?
The collateral an option writer must post is generally referred to as 'margin.' This margin is a good-faith deposit required by the exchange or broker to ensure the writer can fulfill their obligation if the option is exercised or assigned. The amount of margin required fluctuates based on the risk profile of the option position.
Glossar
Underlying Crypto Asset
Asset ⎊ The term "Underlying Crypto Asset" denotes the digital token or cryptocurrency serving as the reference point for derivative contracts, such as options or futures.
Writer
Obligation ⎊ A writer, within cryptocurrency and derivatives markets, assumes contractual obligations through the sale of options or the shorting of underlying assets, establishing a defined liability contingent upon future price movements.
Option Writer
Strategy ⎊ The Option Writer, within cryptocurrency derivatives, assumes a short position in an options contract, obligating them to fulfill the contract's terms if the option is exercised by the holder.