Put or Call Option (written)




Put optionA put option is a contract that provides the buyer the right to sell a security.  The writer of a put option has an obligation to buy the security at a specified price (i.e., the “strike price”) from the buyer if the buyer exercises the option before the contract’s expiration date.

Call OptionA call option is a contract that provides the buyer the right to purchase a security.  The writer of a call option has an obligation to sell the security at a specified price (i.e., the “strike price”) to the buyer if the buyer exercises the option before the contract’s expiration date.

Caution:  This entry applies to put and call options written on the market.  It does not apply to:

  • Call options acquired through an employment relationship, such as through an employee stock purchase plan or an incentive stock option plan.  See the “Employee Stock Purchase Plan” and “Option (incentive stock option plan) entries for additional information about these types of employment-related options.
  • Put or call options that have been purchased rather than written.  An option buyer does not have an obligation to exercise an option but rather may choose to let the option expire, unexercised.  For this case, see the “Option (put or call purchased)” entry.