Question

• If a call option buyer is exercising her call option and buys a share of underlying stock at exercise price, from whom does she buy this share of stock?
• If a put option buyer is exercising her put option and sells a share of underlying stock at exercise price, to whom does she sell this share of stock?

Answer 1

In Option contracts, if you are buying an option from the other party, the counter party is called a writer of the option

So, to enter into an option you need a buyer of the option and writer of the option

1. Call option buyer buys the stock from the writer of the call option who has the obligation to sell them to the buyer of the call option

2. Put option buyer has to sell the option to a put option writer who has the obligation to buy from the buyer of the put option.