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".


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.

  1. Short (or Short Position)

    A short position is the sale of a borrowed security, commodity ...
  2. Option

    A financial derivative that represents a contract sold by one ...
  3. Commerce

    The conduct of trade amongst economic agents. Generally, commerce ...
  4. Writer

    The seller of an option who collects the premium payment from ...
  5. Strike Price

    The price at which a specific derivative contract can be exercised. ...
  6. Underlying

    1. In derivatives, the security that must be delivered when a ...
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  1. Does the seller (the writer) of an option determine the details of the option contract?

    The quick answer is yes and no. It all depends on where the option is traded. An option contract is an agreement between ... Read Full Answer >>
  2. When does one sell a put option, and when does one sell a call option?

    The incorporation of options into all types of investment strategies has quickly grown in popularity among individual investors. ... Read Full Answer >>
  3. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  4. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  5. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>
  6. How can an investor profit from a fall in the utilities sector?

    The utilities sector exhibits a high degree of stability compared to the broader market. This makes it best-suited for buy-and-hold ... Read Full Answer >>

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