Write option

A write option is the sale of a call or put option, obligating the writer to deliver the underlying asset or settle cash if the option is exercised.

For example, selling a call on crude oil obliges the writer to sell at the strike price if the buyer exercises. The writer receives a premium but assumes potential losses if the market moves unfavorably.

Writing options is a common strategy in derivatives markets for generating income, hedging, or speculation. It requires careful risk management due to potential unlimited or substantial exposure.

Understanding write options enables traders to structure strategies, manage obligations, and optimize returns in options and commodity markets.