A call option writer receives ___ for selling an option.Spot pricePremiumStrike PriceAcquisition priceNone of the above

Break Down the Problem

1. Identify the key terms related to call options.
2. Understand the role of a call option writer in the options market.

Relevant Concepts

1. Call Option: A financial contract that gives the holder the right, but not the obligation, to buy a stock (or asset) at a specified price (strike price) before a certain date.
2. Option Writer: The seller of the option contract. In exchange for taking on the obligation to sell shares at the strike price, the option writer receives a payment known as the premium.

Analysis and Detail

• The writer of a call option is compensated for assuming the risk of potential loss should the buyer of the option decide to exercise their right to purchase the underlying asset. This compensation is termed the premium.

Verify and Summarize

• In this context, the premium is the amount received by the writer at the initiation of the option contract.

Final Answer

A call option writer receives Premium for selling an option.