1: option writer definition
2: how the option writer works
3: option writer vs future writer
4: example of option writer
Opening information:
Option writer sentence breaks into two words option and writer, option means choice for one thing or one matter, and writer means a person who printed a letter in any physical or electronic data sheet.
An option writer is a person who prices or writes with the option of a contract. So now let’s have a look at what is an option writer, how the option writer works in the stock market for all the speculators and Investors, and what is the difference between the option writer and a future writer, finally one clear example of the option writer.
1: option writer
Mr. Maluh and Mrs.Amanda a business partners, where Amanda created a contract to purchase a Maluh business at a very discount in the future but she didn’t have any obligation or need to purchase his product at a discount.
Because the Maluh business product of iron is sold for 26 dollars, that Amanda predicted after 6 years Malik iron would be sold for 65 dollars per unit.
To purchase the iron after the 6 years for 65 dollars, Amanda paid 20 dollars premium for the created contract, if the iron wouldn’t be valued at 65 dollars or at least above the 26 dollars after the 6 years, then the 20 dollars premium would be kept by maluh and Amanda had a choice or option to not purchase the iron in future based on the written contract.
Here the contract agreement which is created to purchase or not purchase the iron based on the choice price of the future is called an option and Amanda is the one who wrote a contract with choice, so she became an option writer.
So now let’s dive into how the option writer works in the public market for all the speculators and Investors.
2: how option writer
Option writer means representing any of the contract to write with choice of option do the something.
Therefore option writer won’t demonstrate any single physical object as an option contract or option writing, any of the contract or writing which are written by any person with a choice then they are considered an option writer.
Any person who is willing to trade the stock using the contract with the choice to purchase the shares or not in a future time for the pre-determined price, then they are known as an option writer.
Next whenever any of the humans who wrote a contract using a bond security price to trade the contract with a bond price in the future time with a non-pre-determined price but with the option to purchase a bond or not, would they become an option writer?
Moreover, the people who used the index fund security to create contract agreements or option writing to trade the index price in future time with the choice of predetermined or non-pre-determined price by future market price could be elaborated as an option agreement.
Then when one person makes a contract or option to trade the commodities of gold, silver, crops, and diamond securities price extra… in the future time with providing put or call options to the option traders would illustrated as option writers.
On the other hand, Men or women who wrote a contract with any of the choice to purchase or not purchase the business single or individual stock in a future time frame with pre-determined time are called option writers.
So anyone who writes a contract agreement using any kind of security with a choice to purchase that security at the end of the period of the contract would be made them as an option writer.
Most people confuse the option and future writer, so let’s jump into the key difference in it anyway.
3: option writer vs future writer
The difference between the option writer and future writer, the option writer represents those who wrote a contract with an option to purchase the security at the end of the contract expiration by using another security.
The future contracts focus not on providing options instead the contract focuses on just be done to
purchase the security based on the market price even in loss.
To make you more clear about the option writer, let’s see into one clear example anyway.
4: example of option writer
Say company H is the one which is a public trading Industries, using the business stock share price of 25 dollars, your friend had created a two-contract deal with you.
One contract is formed based on the choice of purchasing company H shares on a future day or pre-determined time and another contract formed depends on the must or order to purchase the shares on the future date of Company H.
Here the contract provided by your friend with no option or choice to purchase the shares becomes a future writer, and the option contract producer is called an option writer.