Writers of option contracts
A) have a limited liability specified in the contract.
B) hope to exercise the option on favorable terms.
C) earn a commission no matter what subsequently happens to the contract.
D) earn a profit when the option expires without being exercised.

Question

Quizplus · Accepted Answer

Writers of option contracts earn a profit when the option expires without being exercised because they get to keep the premium paid by the buyer of the option. This premium is the profit for the writer if the option is not exercised.

Writers of Option Contracts