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Thursday, January 20, 2011

listed stock option creation

Let's focus on a call option on a new stock symbol named "TYX".

There'll be a seller and a buyer of the option. Initially, the option writer is the seller.

Is the exchange the counter party to every seller and every buyer? yes

Does the options exchange always create a buy and sell transactions at the same time? yes

Must a put option be created at the same time? No. Early option exchanges list only calls.