Option traders involved in online options trading needs to know more details information on the options market. This include the rights and obligation of the different option traders.
As in any contract, there are at least 2 parties in an options contract, the buyer and the seller.
The buyer is referred to as the option holder.
The seller of the options is also referred to as the option writer.
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A comparison on the buyer and seller is as follow:
The other party is the Options Clearing Corporation (OCC) in the listed option market. They are the issuer of all options and they standardized the contracts details in order for an orderly settlement of all options contracts between the brokerage houses and the other option traders.
This give the option traders the confidence to trade, knowing that they will be able to exercise their options as and when they want it and a ready market is available.
Next go to Why Trade Options to understand the pros and cons of options trading
Return from Rights and Obligations of Option Traders to Option Basics