Grantor

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Dynasty Trust

    Long-term trusts created to pass wealth from generation to generation ...
  2. Call

    1. The period of time between the opening and closing of some ...
  3. Premium

    1. The total cost of an option. 2. The difference between the ...
  4. Writer

    The seller of an option who collects the premium payment from ...
  5. Naked Option

    A trading position where the seller of an option contract does ...
  6. Put

    An option contract giving the owner the right, but not the obligation, ...
RELATED FAQS
  1. Why is my rent on my credit report?

    The primary purpose of consumer credit reports is to provide lenders with an educated evaluation of a potential borrower ... Read Full Answer >>
  2. What risks should I consider taking a short put position?

    The risks to consider before taking a short put position are the odds of sustained weakness in the asset price and a spike ... Read Full Answer >>
  3. What happens if a software glitch fails to execute the strike price I set?

    If you've ever suffered the frustrating experience of having an order not filled or had a strike price fail to execute because ... Read Full Answer >>
  4. In what market situations might a short put be a profitable trade?

    Short puts would be a profitable trade in low-volatility bull markets or range-bound markets. Selling puts is a strategy ... Read Full Answer >>
  5. What is the relationship between implied volatility and the volatility skew?

    The volatility skew refers to the shape of implied volatilities for options graphed across the range of strike prices for ... Read Full Answer >>
  6. How are commodity spot prices different than futures prices?

    Commodity spot prices and futures prices are different quotes for different types of contracts. The spot price is the current ... Read Full Answer >>
Related Articles
  1. Taxes

    Tax-Efficient Wealth Transfer

    Taxpayers with large taxable estates were required to take steps to reduce them before 2011.
  2. Options & Futures

    Options Basics Tutorial

    Discover the world of options, from primary concepts to how options work and why you might use them.
  3. Retirement

    Why You Should Draft A Will

    Don't trust the courts to follow your wishes - plan the distribution of your own assets.
  4. Insurance

    Encouraging Good Habits With An Incentive Trust

    Money can be a powerful motivator - why not use it to teach your heirs positive lessons?
  5. Retirement

    Establishing A Revocable Living Trust

    This arrangement allows you to have more control over your estate - both before and after your death.
  6. Insurance

    Futures Fundamentals

    For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
  7. Retirement

    Estate Planning Basics

    Deciding what will happen to your assets when you pass away is a must - no matter how wealthy you are.
  8. Investing Basics

    What Does Spot Price Mean?

    Spot price is the current price at which a security may be bought or sold.
  9. Investing Basics

    What is a Greenshoe Option?

    A greenshoe option is a provision in an underwriting agreement that allows the underwriter to buy up to 15% of the shares in an IPO at the offer price.
  10. Investing Basics

    What Does a Clearing House Do?

    A clearing house is a third-party agency or separate entity that acts as a go-between for buyers and sellers in financial markets.

You May Also Like

Hot Definitions
  1. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  2. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  3. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  4. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  5. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  6. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!