What intermediary guarantees an option writer's performance?
A) credit worthiness rating company
B) brokerage
C) good-till-canceled order
D) clearinghouse
E) none of the above

Question

Quizplus · Accepted Answer

The clearinghouse guarantees the option writer's performance by acting as the middleman between the buyer and the seller. The clearinghouse collects margin from both parties and ensures that the obligations of each party are fulfilled. This reduces counterparty risk for both the buyer and the seller.

What Intermediary Guarantees an Option Writer's Performance