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

Question

Quizplus · Accepted Answer

The writer of an option receives the option premium upfront and has the obligation to fulfill the terms of the option if it is exercised. However, regardless of whether or not the option is exercised, the writer keeps the option premium as their compensation for taking on the obligation.

The Writer of an Option Keeps the Option Premium Regardless