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Option Writer

The writer of an option, whether it be a call or put, receives the premium when the option is sold. However this option writer has the OBLIGATION to deliver, or take the delivery of, the underlying asset if the holder of the option chooses to exercise.

An option writer has an infinite amount of risk, as they are obligated to exercise the holder's option if needed.

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Call and Put option

Category: Education

Total terms: 10

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