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Dear sir
I get it that options are traded. Are they traded at the premium price which changes every day. Is it the market that changes the option price? Does the dealer only get the first premium or does be profit from the change in preium price as wellNot all options are traded – there are traded options and over-the-counter options as is explained in my free lectures.
As far as traded options are concerned, the price does change and is determined by the market. The dealer who ‘created’ the option only receives the premium when they are first issued.
Supose ‘ A’ is the dealer. He creates the option( his reward is only the premium) then he sells B the option. Is the option traded between B and the rest of the market? and on the exercise date whomever holds the options has the right to buy or sell the shares with the dealer ‘A’. Is this correct?
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