# Define the Term "Option Writer" or "Seller." ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

---

## Define the Term “Option Writer” or “Seller.”

The option writer is the party who sells the option contract and receives the premium from the buyer. By selling, they take on the obligation to fulfill the contract if the buyer chooses to exercise.

The writer's maximum profit is the premium received, but their potential loss can be unlimited (for a naked call).

- [Explain the Concept of “Assignment” for a Covered Call Writer](https://learn.greeks.live/path/explain-the-concept-of-assignment-for-a-covered-call-writer/)

- [How Does the Lack of Obligation Differ from a Futures Contract?](https://learn.greeks.live/path/how-does-the-lack-of-obligation-differ-from-a-futures-contract/)

- [What Is the Primary Motivation for an Option Writer?](https://learn.greeks.live/path/what-is-the-primary-motivation-for-an-option-writer/)

- [What Is the Difference between a Covered and a Naked Option Writer?](https://learn.greeks.live/path/what-is-the-difference-between-a-covered-and-a-naked-option-writer/)

- [What Is the Difference between a ‘Covered Call’ and a ‘Naked Call’ Strategy?](https://learn.greeks.live/path/what-is-the-difference-between-a-covered-call-and-a-naked-call-strategy/)

- [What Is the Counterparty Risk Associated with Decentralized Crypto Options Platforms?](https://learn.greeks.live/path/what-is-the-counterparty-risk-associated-with-decentralized-crypto-options-platforms/)

- [In Both Cases, Who Is the Party That Assumes the Risk?](https://learn.greeks.live/path/in-both-cases-who-is-the-party-that-assumes-the-risk/)

- [How Do Options Differ from Futures in Terms of Obligation?](https://learn.greeks.live/path/how-do-options-differ-from-futures-in-terms-of-obligation/)

## Glossar

### [Option Writer](https://learn.greeks.live/area/option-writer/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Exposure ⎊ An option writer, within cryptocurrency derivatives, assumes an obligation to fulfill the underlying asset or cash flow contingent upon the option holder’s exercise of their right.

## Discover More

### [What Is the Difference between a Covered and a Naked Option Writer?](https://learn.greeks.live/path/what-is-the-difference-between-a-covered-and-a-naked-option-writer/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between a Covered and a Naked Option Writer?](https://learn.greeks.live/wp-content/uploads/2025/10/Fractalized-Digital-Asset-Exchange-Mechanism-Representing-Volatility-Surface-Discretization.webp)

Covered writer holds the underlying asset to offset risk; Naked writer does not, facing potentially unlimited loss.

### [In the Context of Options, What Is the Equivalent of a "Payout Scheme" for a Contract Seller?](https://learn.greeks.live/path/in-the-context-of-options-what-is-the-equivalent-of-a-payout-scheme-for-a-contract-seller/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![In the Context of Options, What Is the Equivalent of a "Payout Scheme" for a Contract Seller?](https://learn.greeks.live/wp-content/uploads/2025/10/Precise-Bifurcation-of-Synthetic-Asset-Obligation-Between-Bouncing-Liquidity-Pools.webp)

The seller's equivalent is the upfront premium received, which is their guaranteed revenue for assuming the contract's obligation and risk.

### [Define the Term "Cash-Settled" in the Context of Derivatives Contracts](https://learn.greeks.live/path/define-the-term-cash-settled-in-the-context-of-derivatives-contracts/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define the Term "Cash-Settled" in the Context of Derivatives Contracts](https://learn.greeks.live/wp-content/uploads/2025/10/Interoperable-Blockchain-Modularity-Traded-as-Structured-Digital-Asset-Settlement-Instruments.webp)

Settlement involves paying the difference in cash, not physical delivery of the underlying asset.

### [Define the Term "Systemic Risk" in the Context of a Highly Leveraged Derivatives Market](https://learn.greeks.live/path/define-the-term-systemic-risk-in-the-context-of-a-highly-leveraged-derivatives-market/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define the Term "Systemic Risk" in the Context of a Highly Leveraged Derivatives Market](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Engineering-of-DeFi-Yield-Enhancement-Structures-Highlighting-Staking-Mechanisms-and-Liquidity-Provision-Prowess.webp)

Systemic risk is the risk of widespread collapse due to interconnectedness; in derivatives, it's amplified by leverage and cascading liquidations.

### [Define the Term "Liquidation Cascade."](https://learn.greeks.live/path/define-the-term-liquidation-cascade/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define the Term "Liquidation Cascade."](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Exchange-Liquidity-Pool-Crosscurrents-Modeling-Volatility-Surface-Skewness.webp)

A chain reaction where forced liquidations cause further price drops, triggering more liquidations.

### [Explain the Term 'Maintenance Margin' in the Context of Leveraged Derivatives Trading](https://learn.greeks.live/path/explain-the-term-maintenance-margin-in-the-context-of-leveraged-derivatives-trading/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Explain the Term 'Maintenance Margin' in the Context of Leveraged Derivatives Trading](https://learn.greeks.live/wp-content/uploads/2025/10/Deep-Dive-Visualization-of-Interlayer-Material-Stratification-in-Volatility-Surface-Modeling.webp)

Maintenance margin is the minimum equity required to keep a leveraged position open; falling below it triggers a margin call or liquidation.

### [Define the Term 'Volatility' in the Context of Financial Derivatives](https://learn.greeks.live/path/define-the-term-volatility-in-the-context-of-financial-derivatives/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define the Term 'Volatility' in the Context of Financial Derivatives](https://learn.greeks.live/wp-content/uploads/2025/10/Crystalline-Apex-Structure-Over-Pleated-Fan-Substrate-Representing-DeFi-Option-Vault-Volatility-Surface-Dynamics.webp)

A measure of the price variation of the underlying asset over time, which is a key determinant of an option's premium.

### [How Can a Put Option Seller Mitigate Their Potential Loss?](https://learn.greeks.live/path/how-can-a-put-option-seller-mitigate-their-potential-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can a Put Option Seller Mitigate Their Potential Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Actuation-Mechanism-Over-Blockchain-Data-Ledger-Illustrating-Tokenized-Asset-Settlement.webp)

Mitigation involves selling cash-secured puts or using a put spread by buying a lower-strike put to limit the maximum loss.

### [What Happens If a Seller in a Physically-Settled Contract Does Not Hold the Underlying Crypto?](https://learn.greeks.live/path/what-happens-if-a-seller-in-a-physically-settled-contract-does-not-hold-the-underlying-crypto/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Happens If a Seller in a Physically-Settled Contract Does Not Hold the Underlying Crypto?](https://learn.greeks.live/wp-content/uploads/2025/10/Mint-Green-Hued-Semi-Dome-Obscuring-Fluctuating-Marble-Patterned-Bifurcated-Asset-Allocation-Surface.webp)

The seller defaults, and the clearing house forces them to acquire and deliver the asset or imposes a significant financial penalty.

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