The writer of a call option gains when the market value of the futures contract or security named in the option rises above the strike price.

Question

Quizplus · Accepted Answer

The writer (seller) of a call option incurs a loss when the market value of the underlying asset rises above the strike price, as the buyer of the call option will likely exercise their right to buy the asset at the lower strike price, forcing the seller to potentially buy the asset at the higher market price to fulfill the contract.

The Writer of a Call Option Gains When the Market