It is impossible for the binary option seller to default because the maximum possible loss of a binary option contract is fixed and known before the contract is established. The system automatically checks the user's balance and reserves enough margin that covers the maximum possible loss before the user sell the option.
Futures & Options
Users need to deposit enough funds as margin to open a position. Also, our system keeps monitoring and adjusting every user's margin every second. In case a user's margin level is below the margin call level, the system will immediately cancel the user's orders and also liquidate his/her positions using market orders.
If there is no liquidity for the position to be liquidated promptly, the seller may lose more than his/her equity. In this case, we will first use our insurance fund to fill the gap; if there is not enough insurance fund, a socialized loss process will be initiated.
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