HI Team,
I had one query
If the option seller is having loss unlimited or max to margin paid…?
If unlimited, how to get back that amount from user if he is not ready to pay.
if it is max to margin paid, how the option buyer is having unlimited profit…?
Majority of the brokers will square off your positions if you don’t deposit the money needed to fulfill the minimum criteria.
There is no question of not paying up because even if a client defaults broker has to pay.
Hypothetically lets say Person X an option seller has to Pay 1 Lakh to you, and he isn’t paying up, or dead, or ran away, so in this case his broker has to pay to you whatever was the payment due.
If a person has a stop loss (Say 10 Lakh Capital and 3 Lakh Stop loss) he’ll exit his position when his stop loss hits and another person who is ready to take the risk of buying his position buys the option hence whatever is the money due to you is guranteed no matter what.
Thank you so much for your response