Advertising

Writer

• The seller of an option, usually an individual, bank, or company, that issues the option and consequently has the obligation to sell the asset ( if a call) or to buy the asset (if a put) on which the option is written if the option buyer exercises the option.

 
 Embedded terms in definition
 Asset
Buy
Option
Sell
 
 Referenced Terms
 Assignment: The receipt of an exercise notice by an options Writer that requires the writer to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.Is the action for the seller of the option of acquiring the opposite position when an option is exercised. When a put is exercised, the Writer receives a long position in securities or a long futures contract. When a call is exercised, the writer receives a short position in the securities or a short futures contract.A voluntary liquidation procedure by which a firm's creditors pass the power to liquidate the firm's assets to an adjustment bureau, a trade association, or a third party, which is designated the assignee.

 Assignment: The receipt of an exercise notice by an options Writer that requires the writer to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price.Is the action for the seller of the option of acquiring the opposite position when an option is exercised. When a put is exercised, the Writer receives a long position in securities or a long futures contract. When a call is exercised, the writer receives a short position in the securities or a short futures contract.A voluntary liquidation procedure by which a firm's creditors pass the power to liquidate the firm's assets to an adjustment bureau, a trade association, or a third party, which is designated the assignee.

 Bank guarantee letter: Is a document by which an approved bank certifies that an put option Writer or grantor has sufficient funds at the bank to cover the write. The funds are equal to the exercised value of the put. This value is equal to the strike price multiplied by the number of shares. It effectively reflects an outright purchase of the underlying security at the strike level.

 Call swaption: A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The Writer therefore becomes the fixed-rate receiver/floating rate payer.

 Cap: Is the ceiling, upper limit price, or interest rate which would be paid. It is analogous to a long call position.A Cap is a call option on interest rates. If the interest rates rise above the cap rate, then the seller compensates the buyer for the difference in interest rates times a notational amount. The cap can in effect convert floating rate liabilities into fixed rate liabilities. The cap on home mortgages is an example of an interest rate cap. A series of options in which the Writer guarantees the buyer, a payor of floating, that he will pay the buyer whatever additional interest he must pay on his loan if the rate on that loan goes above an agreed rate, X.An upper limit on the interest rate on a floating-rate note.

 
 Related Terms
 Option writer

<< Write down Writes >>

Multi-Tasking In Your 30s, 40s or 50s: Managing for today and saving for tomorrow, including a child's college expenses and your retirement More...

Am I not destroying my enemies when I make friends of them? - Abraham Lincoln (1809-1865)

Advertising



Copyright 2009-2018 GVC. All rights reserved.