Writer

DEFINITION of 'Writer'

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

BREAKING DOWN 'Writer'

For example, a writer holds a short position on a call option. If the call option is exercised, then the writer has to sell the underlying stock at the strike price of the option. Conversely, if you are the writer of a put option, you are said to be long, and must purchase the underlying stock at the particular 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.

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