The seller of an option has the
A) right to buy or sell the underlying asset.
B) the obligation to buy or sell the underlying asset.
C) ability to reduce transaction risk.
D) right to exchange one payment stream for another.

Question

Quizplus · Accepted Answer

The seller of an option, also known as the option writer, has the obligation to buy or sell the underlying asset at the strike price agreed upon in the option contract. They are essentially taking on the risk of the option and must be prepared to fulfill their obligation if the option is exercised by the buyer. Option writers receive a premium for taking on this obligation.

The Seller of an Option Has the