Stock Glossary

Option writer

Investor who sells an option, and is therefore obligated to buy or sell the underlying security at an agreed-upon price if the option is exercised.

In return for a premium, the option writer promises to deliver either the underlying security or the appropriate cash amount if the option is exercised. There are two kinds of option writers:

A put writer must buy the underlying security at the agreed-upon price if the option holder exercises the option before it expires. A call writer must deliver the underlying security at the agreed-upon price if the option holder exercises the option before it expires.