![]() ![]() ![]() On the flip side, when an individual sells, or writes, an option to open a new position ("Sell to Open"), they are accepting an obligation-either an obligation to sell the underlying security at the strike price in the case of a call option or the obligation to buy that security in the case of a put option. When someone buys options to open a new position ("Buy to Open"), they are buying a right-either the right to buy the underlying security at a specified price (the strike price) in the case of a call option, or the right to sell the underlying security in the case of a put option. For information about the inherent risks and characteristics of the options market, refer to the Characteristics and Risks of Standardized Options also known as the Options Disclosure Document (ODD). Options trading carries risk and requires specific approval from an investor's brokerage firm. To the average investor, there are likely a number of unfamiliar terms, but for an individual with a short options position-someone who has sold call or put options-there is perhaps no term more important than " assignment"-the fulfilling of the requirements of an options contract. The options market can seem to have a language of its own.
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