Options

Option Seller (Writer)

The party who receives the premium and takes on a potential obligation if the buyer exercises the Option — risk is not capped the same way as for the buyer.

An Option seller (also called a “writer”) receives the premium upfront from the buyer, in exchange for taking on a potential obligation — if the buyer chooses to exercise the Option, the seller must fulfil their side of the contract. Unlike the buyer, the seller’s risk is not capped by the premium.

See the full buyer vs seller risk comparison in What Are Options? The Complete Beginner’s Guide.