Under the Regulations Governing the Index Options; only the Institutions, TREC Holding Members of PSX and Non-Broker Clearing Member of the NCCPL that are meeting the conditions set in the eligibility criteria are eligible to become Option Writers
for which the main idea is to ensure that the Writer of Option Contracts has sound financial and technical standing to qualify for this mode of trade.
nonrefundable payment to the option writer
to compensate for the
If an option writer
is bullish, he can write a call covered or write a put naked.
Similarly, in the second state of the world, the option expires worthless and the option writer
sells the 1/2 share of stock for $4, pays the loan off with $3.
command more premium for taking that risk, but the proportional price increase in premium is far larger the nearer the option is to expiration.
Purchasers of options pay an amount, known as a premium, to the option writer
in exchange for the right under the option contract.
This tutorial presents the market conditions under which it is profitable to exercise an option and the payoffs to both the option buyer and option writer
at the time of the option being exercised.
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The lead CatEPut option writer
was European Reinsurance Company of Zurich, a subsidiary of Swiss Reinsurance Company.
, however, quote their prices based on the volatility of the log closing price change [[sigma].
Question--How is the premium income received by option writers
On these markets the implied volatility is directly observable through the quotes of option writers
and option buyers.
In the second scenario, dynamic hedging strategies used by option writers
produce selling pressures that impair market liquidity and amplify price declines, and, in the event, render the dynamic hedges ineffective.