Seller

AAA

DEFINITION of 'Seller'

1. An individual or entity that exchanges any type of good or service in return for payment.

2. In the option market, the seller is the investor who collects a premium from the buyer in return for taking on the risk associated with holding a short position in an option. The seller of an option is also known as a "writer".

INVESTOPEDIA EXPLAINS 'Seller'

1. In financial markets, the seller is the investor who gives up his/her investment to the buyer in return for payment. Individual investors sell everything from equities and options to commodities and currencies - and much more. You don't have to look hard to find some sort of seller in the world of business.

2. Being the seller of an option is relatively risky when compared to other types of investment activity. For example, the writer of a call option is obligated to sell a specific number of shares of an underlying security in the event that the price heads above the strike price.

RELATED TERMS
  1. Writer

    The seller of an option who collects the premium payment from ...
  2. Underlying

    1. In derivatives, the security that must be delivered when a ...
  3. Option

    A financial derivative that represents a contract sold by one ...
  4. Strike Price

    The price at which a specific derivative contract can be exercised. ...
  5. Short (or Short Position)

    1. The sale of a borrowed security, commodity or currency with ...
  6. Musawamah

    An Islamic finance term that describes a sale in which the seller ...
Related Articles
  1. Economics Basics
    Economics

    Economics Basics

  2. Options Basics Tutorial
    Options & Futures

    Options Basics Tutorial

  3. The 4 Advantages of Options
    Options & Futures

    The 4 Advantages of Options

  4. When does one sell a put option, and ...
    Options & Futures

    When does one sell a put option, and ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center