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.

BREAKING DOWN '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. Allocation Notice

    An official notification from an options clearing firm to the ...
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  3. Escrow Agreement

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

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

    An options seller who does not own the underlying security for ...
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RELATED FAQS
  1. Who manages an escrow account?

    Managing an escrow account is a job for a trusted and experienced service provider. Discover the best personal finance solutions ... Read Answer >>
  2. How do I change my strike price once the trade has been placed already?

    Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >>
  3. Do landlords set up escrow accounts for their tenants' security deposits?

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  4. When is a put option considered to be "in the money"?

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  5. After exercising a put option, can I still hold my option contract in order to sell ...

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