Grantor

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DEFINITION of 'Grantor'

1. A seller of either call or put options who profits from the premium for which the options are sold. Synonymous with option writer.

2. The creator of a trust, meaning the individual whose assets are put into the trust.

BREAKING DOWN 'Grantor'

1. For example, say a writer has sold a call option, or assumed a short position in a call option. If the call option is exercised, then the writer has to sell the underlying stock at the strike price Conversely, if the writer sells a put option, he or she is said to be long, and must purchase the underlying stock at the strike price. Being a writer is relatively risky - especially on a naked position. This technique should not be used by those who are new to option markets.

2. The grantor is the person who creates the trust, and the beneficiaries are the persons identified in the trust to receive the assets.

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