Seller

What is a 'Seller'

A seller is 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".

BREAKING DOWN '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. Put To Seller

    The exercise of a put option. Put to seller would usually occur ...
  3. Writing An Option

    The expression "writing an option" refers to the act of selling ...
  4. Option

    A financial derivative that represents a contract sold by one ...
  5. Seller's Call

    An agreement between a buyer and a seller for a specific grade ...
  6. Covered Writer

    An options seller who owns the underlying security represented ...
Related Articles
  1. Options Seller Traders

    In contrast to buying options, an options seller trader sells stock options. This comes with an obligation to sell the underlying equity to a buyer if that buyer decides to exercise the option ...
  2. Professionals

    OPTION BASICS

    An option is a contract between two parties that determines the time and price at which a stock may be bought or sold. The two parties tothe contract are the buyer and the seller. The buyer of ...
  3. Options & Futures

    Options Basics: What Are Options?

    An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock ...
  4. Options & Futures

    Options Basics: Conclusion

    Options are sophisticated trading tools that can be dangerous if you don't educate yourself before using them. Please use this tutorial as it was intended - as a starting point to learning ...
  5. Home & Auto

    Ins And Outs Of Seller-Financed Real Estate Deals

    Seller financing works like this: Instead of a buyer receiving a loan from a bank, the person selling the house lends the buyer the money for the purchase.
  6. Options & Futures

    Options Pricing: The Basics Of Pricing

    The price, or cost, of an option is an amount of money known as the premium. The buyer pays this premium to the seller in exchange for the right granted by the option. For example, a buyer might ...
  7. Professionals

    Managing An Option Position

    Both the buyer and seller, in an option trade, establish the position with an opening transaction. The buyer has an opening purchase and the seller has an opening sale. To exit the option position, ...
  8. Options & Futures

    When Should I Sell A Put Option Vs A Call Option?

    Beginning traders often ask not when they should buy options, but rather, when they should sell them.
  9. Professionals

    Options: Calls and Puts

    CFA Level 1 - Options: Calls and Puts. Learn the two main types of option derivatives and how each benefits its holder. Provides an example multiple choice question for an option.
  10. Options & Futures

    Options Hazards That Can Bruise Your Portfolio

    Learn the top three risks and how they can affect you on either side of an options trade.
RELATED FAQS
  1. Are there any risks involved in trading put options through a traditional broker?

    Explore put option trading and different put option strategies. Learn the difference between traditional, online and direct ... Read 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 Answer >>
  3. How can derivatives be used to earn income?

    Learn how option selling strategies can be used to collect premium amounts as income, and understand how selling covered ... Read Answer >>
  4. What is the difference between "right" and "obligation" on a call option?

    Learn what a call option is, what determines a buyer and seller of an option, and what the difference between a right and ... Read Answer >>
  5. How is it possible to trade on a stock you don't own, as is done in short selling?

    Understand how the process of short selling allows a person to sell a stock he or she doesn't technically own by borrowing ... Read Answer >>
  6. What options strategies are best suited for investing in the banking sector?

    Learn how shrewd investors employ the covered call options strategy to capitalize on the banking sector's reputation for ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center