Option seller

Option seller

Also called the option writer; the party who grants a right to trade a security at a given price in the future.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
In a worst-case scenario, if Microsoft shares rise from $139 to $180 by the expiration date, the option seller simply must sell those Microsoft shares to the buyer at $175 per share, missing out on the final $5 of market gains.
If there were 60 inches of snow during the coverage period, 15 inches over the strike of 45 inches, the municipality would receive $150,000 from the option seller. The municipality has now hedged against exceeding its budget due to excessive snowfall during the winter season.
The upper strike level indicates the baseline in which incremental payments to the municipality begin, while the lower strike level indicates the baseline at which payments from the municipality to the option seller begin.