Margin requirements vary by option type. Brokers require investors to deposit margin funds because they may be needed to buy or sell underlying stocks if the options are exercised. They may also be needed to close losing positions. The loan in the account is collateralized by the securities and cash. The brokerage lends money at a given interest rate, allowing the margin account owner to invest more money than they initially had in their account.
The more collateral an account has, the more money a brokerage will lend to an account. We accoynt think about this like taking a loan out against optiosn house.