If I buy an option and sell it, I have no obligation, is that right? Only the original writer of the option has the obligation to sell or buy shares at the strike price?
If I write an option and sell it, then I do have an obligation, is that right?
Thank you.
Matthew C, thank you for your response. I understand your point. But my uncle trades options, and he was telling me something about how when you sell an option, you have no obligation, but only the “original” writer has an obligation, the person who actually first released the options into the market. My uncle also writes options too, in which he says he does have an obligation and he said it brokerages, for example Etrade charge around a $2 fee for “writing” options. And thats the pro of writing them over simply buying and selling them. Because when you buy and sell them, you have to pay for the options, contract fees, etc.
Now since he told me this last night, I’ve been trying to search everywhere on the web if he is right that only the “original” option writer has the obligation, but that anybody else can buy and sell the options with no obligation. Was he wrong? I’m dying to know.
Thanks again guys.
I want the info just to be able to consider volume to price ratios when looking at price fluctuations.
