The writers of options and buyers of options have equal and opposite payoffs, minus commissions.

Question

Quizplus · Accepted Answer

This statement is true because the buyer of an option pays a premium to the writer in exchange for the right to buy or sell the underlying asset at a certain price, while the writer collects the premium but takes on the obligation to buy or sell the asset if the buyer decides to exercise the option. Therefore, their payoffs are equal and opposite. However, both parties may incur commissions for executing the option, which would affect their actual net payoffs.

The Writers of Options and Buyers of Options Have Equal