option writer


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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.
References in periodicals archive ?
the option writer would be providing the option holder seller-financing,
financing, albeit one which runs from the option writer to the option
In the case of a cash-settled option, the option writer may be
The option writer who invests the option premium does so at
current law requires the option writer to report income derived from
from the option holder to the option writer, consistent with our earlier
principles to an option, it appears that the option writer is furnishing
as a loan to the option writer, it may be time to relegate that premise
an option writer needs to cover the risk of adverse changes in the price
economically, the option writer must charge the purchaser an amount
In sum, option writers are generally willing to accept the risks of