The seller of an option keeps the option premium regardless of whether or not the option is ever exercised.

Question

Quizplus · Accepted Answer

This statement is true. When an option is sold, the seller (also known as the option writer) receives the premium from the buyer of the option. This premium is paid upfront and is not refundable, regardless of whether or not the option is exercised. The seller keeps the premium as compensation for taking on the risk of fulfilling the option contract if it is exercised.

The Seller of an Option Keeps the Option Premium Regardless