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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Writer

Definition:

Shakespeare was one. But in this case, "writer" is the person who sells an option. They're called a writer because years ago sellers of options probably had to write up some of the sales contract. By hand. By the light of a candle. 

Example

We have shares of Google (GOOG) that are trading at $500. We write you a call option that gives you the right to buy a share of GOOG from us for $550 a share. If you decide to exercise that option when Google is trading at $600, we'll sell the stock to you for $550, and you'll make a nice profit. If Google drops to $400, you might not want to buy, and we get to keep the money you paid us for the option.