Explain why a naked short option position requires a margin.

The seller of the option is exposed to the risk that the loss on the position exceedsthe proceeds from selling $($or writing$)$ the option. The clearinghouse assumes the risk that the seller of the option cannot make good on the obligation. Therefore, the clearinghouse requires that the option seller make a margin deposit to protect against losses. If the price moves against the option seller, additional margin deposit is required.