Chapter 01 · Section 1.1

Options - Purchasing vs. Writing

It is useful to know the important distinctions between FUTURES and exchange-traded OPTIONS.

But first, we must distinguish between purchasing an option and writing an option, because:

a) purchasing an option involves acquiring a right to choose, whereas writing an option involves incurring an obligation to fulfill.
• b) purchasing an option involves incurring an obligation to fulfill, whereas writing an option involves acquiring a right to choose.
  No. One usually does not usually pay for an obligation. The right to choose however would be something worthwhile to pay for.

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