RE:About To Do Something Stupid A bit more perspective:
DFN is already 1.9X leveraged. You are planning to use another 1.75X on your margin account. That will make you total 3.3X leveraged on underlying, and at roughly 5.9% cost.
That leverage means 30% move lower on underlying will wipe your capital out. You will get margin call lot earlier, depending on where your account is.
That $ 3,500 will protect only a tiny bit. And given that current premium is already over 30%, if DFN premium was to go back close to zero, you are out of capital. More realistically, premium can fall to 10% or so, like it was few weeks ago. That scenario, and if it happens along with small move lower in underlying (like 5-6%) will be enough to wipe you out.
Instead of buying DFN, if you bought basket of underlying, you are gonna give yourself much larger cushion. Leverage will be 1.7X instead of 3.3X. Plus valuation will be roughly 20% cheaper. Buys you almost 2.5 times bigger move than just buying DFN.