10

Options that are not worth exercising just expire. Options that are worth exercising are typically exercised automatically as they expire, resulting in a transfer of stock between the entity that issued the option and the entity that holds it. OCC options automatically exercise when they expire if the value of the option exceeds the transaction cost for the ...


9

Remember writing a call is the same as being short a call, aka, selling-to-open. The correct method to cancel the obligation is to buy-to-close that same contract on the open market. Most brokers offer a drop-down list in the order entry tab, just select buy-to-close instead of sell-to-open. From Investopedia - Definition of 'Buy To Close' The closing of a ...


4

Firstly "Most option traders don't want to actually buy or sell the underlying stock." THIS IS COMPLETELY UTTERLY FALSE Perhaps the problem is that you are only familiar with the BUY side of options trading. On the sell side of options trading, an options desk engages in DELTA HEDGING. When we sell an option to a client. We will also buy an appropriate ...


2

To answer your follow up questions, the fundamentals of option trading means that there will always be a balance in options. Every time one party sells a contract, there is a buying party on the other end. A party might be trading to open, or trading to close the position. When both parties are trading to open, an option is added to the 'open interest' ...


1

Sometimes a clearing house is called a CCP or Central Counterparty. For exchange traded options, the Clearing House or CCP is the counterparty to every transaction. I am not aware of any distinction though have not specifically heard the term "counterparty clearing house" on its own.


1

This is an interesting question, what must happen for options to be incapable of being delivered upon. We can look to history to see what has happened which threatened the entire options market. In 2008, the Securities Exchange Commission banned short selling on all financial stocks and many other issues. This made it impossible for certain kinds of ...


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