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Option Writer

An Option Writer, also known as an Option Seller, is a person or entity that creates a new options contract and then sells it in the option market. They write a contract, stipulating specific conditions like a certain price (strike price) and time (expiry date), and then offer it for sale. 

The Option Writer gets paid a premium by the buyer for granting them the right, but not the obligation, to buy (in case of a call option) or sell (in case of a put option) an underlying asset at the strike price within the specified time period. The writer assumes the obligation to buy or sell the asset if the buyer chooses to exercise the option. 

Becoming an Option Writer can potentially offer high rewards, but it’s also high risk. This is because if market conditions become unfavourable and the buyer executes the option, the writer is obligated to fulfil the contract, which might result in a significant financial loss. Therefore, option writing is generally only recommended for experienced investors who fully understand the risks involved.

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