If I choose to sell a call option that I previously bought to close out my position (instead of excercising it), who is actually buying this option and paying me the premium at hopefully a higher price than I bought it?
2007-07-28 18:23:55 · 2 answers · asked by bearkat87 2 in Business & Finance ➔ Investing
The first answer is correct that selling to close is not "writing" an option, but that does not mean you do not receive the premium. Any time you sell an option you receive the premium. It does not matter if you are selling to open (writing) or selling to close.
When you sell an option you do not know who the buyer is. It could be a "liquidity provider" (market maker) at an exchange, it could be an institution such as a mutual fund, or it could be another individual investor. If you use a limit order to sell the option, it could be anyone willing to pay the price you specified. If you use a market order to sell the option, it would be the highest existing bid outstanding.
2007-07-29 23:57:10 · answer #1 · answered by zman492 7 · 0⤊ 0⤋
yeah, if you are selling the option , ie you bought a call and now you are selling the call, I don't believe that is the same as WRITING a call. IE you aren't getting the premium.
However, I am not entirely Sure what happens when you are selling the previous buy position..that is just my thinking that selling the open option is not WRITING an option.
2007-07-29 02:54:16 · answer #2 · answered by zanthus 5 · 0⤊ 0⤋