Fundamentals of Options 243
Writer Buyer
Prime Fund Clearing Corporation
Clearing Corporation Mega Fund
Since performance guarantee in options contracts is only from the writer, Mega Fund is guaranteed by the
clearing corporation that it will meet the obligation through performance. us, there is no counterparty
risk present when trading in exchange-traded options.
11.7.2 Margin Requirements
Options trading on exchanges also require that the writer of the options put up a margin, similar to the
margin in futures trading. e margin amount is usually calculated on the basis of the variability in stock
price movements. Similar to futures trading, there will be initial margin requirements as well as a vari-
ation margin. e margin account wi