Hi Preetesh, as others have already pointed out, it has got to do with the potential for loss. The maximum loss that an option buyer could suffer is limited to the extent of premium paid upfront. On the other hand, the maximum loss that an option seller could suffer is potentially unlimited. The more the underlying price moves against your short option position, the larger and larger could your losses become. Hence, to safeguard against the risk of the seller defaulting in case he or she suffers a loss, option selling requires high margins.

Abhishek ChinchalkarFYERS Team
Head of Education, FYERS