Escrow Receipt

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DEFINITION of 'Escrow Receipt'

A bank guarantee that an option writer has the underlying security on deposit and that the underlying security is readily available for delivery if the option is exercised.

INVESTOPEDIA EXPLAINS 'Escrow Receipt'

The use of escrow accounts and receipts provides further evidence and security that the securities are available to complete the transaction.

RELATED TERMS
  1. Cover

    The act of completing an offsetting transaction so as to eliminate ...
  2. Exercise

    To put into effect the right specified in a contract. In options ...
  3. Writer

    The seller of an option who collects the premium payment from ...
  4. Escrow

    A financial instrument held by a third party on behalf of the ...
  5. Underlying

    1. In derivatives, the security that must be delivered when a ...
  6. Escrow Agreement

    A legal documents that outlines the terms and conditions between ...
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