My solution - 2x collateral (1x from short 1x from buyer) + very tight margin call -> as little as 15% price drop in BTS compared to the BitAsset can trigger the margin call.
This isn't too different than what I have been proposing although mine is a little bit less friendly to shorts than your proposal (at the benefit of lower undercollateralization risk).
So, I take 15% drop to trigger a margin call to mean that if the price at which the short was matched was p1 (in BitAsset/BTS), then if the price becomes p2 = 0.85*p1 or lower, the short is margin called. If the initial amount of collateral is 2x, then that means the amount of BTS needed to cover a debt of X BitAsset is 2*X/p1 BTS. If the price feed then becomes p2, the collateral will be worth 2*X*p2/p1 BitAsset, which corresponds to a margin call limit of m = 2*p2/p1 = 2*0.85 = 1.7 = 170%. So to recap your proposal, you think the initial collateral requirement should be 200% (100% for buyer and 100% margin from shorter) and the margin call limit should be 170%.
My proposal is that the margin call limit should be 200% and there should be no initial collateral requirement other than it being larger than the margin call limit. So someone can put up 101% margin, which combined with 100% from the buyer gives them an initial collateral of 201%. But then in that case if the price of BTS (in BitAsset/BTS) goes down by 0.5% or more, the short would be margin called. Since shorters would want more volatility protection than that, they will naturally put up more collateral. The short sellers would get to decide not only the quantity of BitAssets to short sell and the price limit (as they can now) but also the initial collateral ratio. Someone might go with 220% (protection from a 9% drop in price) and monitor the price frequently to add more collateral as necessary. Someone else may not want to deal with the hassle of frequently checking up on their shorts and would instead simply short with 300% collateral to begin with.
Edit: Also, what I would really like is for anyone to create a new BitAsset where they define the description, price feed authority, collateral asset type, and margin call limit (among other things; read more about this proposal here
). That way you could create your own BitUSD variant that had a margin call limit of 150% and utilized the same USD/BTS price feeds currently available. Then you could short that BitUSD variant with an initial collateral ratio above the margin call limit (so say 200%). That of course assumes someone will be willing to bid on this BitUSD variant given that it would have a larger undercollateralization risk than the more conservative BitUSD with the 200% margin call limit. But this way we could let the free market decide what level of undercollateralization risk is appropriate.