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Option Writer

   Also found in: Dictionary/thesaurus, Legal, Encyclopedia, Wikipedia 0.01 sec.
Option writer

Option Writer
One who originally sells an option contract. In exchange for the premium, the option writer takes on an obligation to buy or sell (depending on the type of option) the underlying asset at the discretion of the option holder. For example, in a call, the option writer must sell the underlying asset to the option holder if the holder decides to exercise the option. If the option writer does not already have a long position in the underlying asset, he/she must obtain one so as to sell the position and fulfill the contract.

option writer
The seller of a call option or a put option in an opening transaction. The option writer receives a premium and incurs an obligation to sell (if a call is sold) or to purchase (if a put is sold) the underlying asset at a stipulated price until a predetermined date. See also writing.


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A futures contract gives the holder the right and the obligation to buy or sell, which differs from an options contract, which gives the buyer the right, but not the obligation, and the option writer (seller) the obligation, but not the right.
The increased physical buying and rising platinum forward rates initiated a price move back above $1,200 an ounce, forcing one large option writer to purchase metal to delta hedge its position.
They also note that option writers should be compensated for bearing the risk of shocks in volatility.
 
 
 
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