What is the obligation of the seller of a call option on a stock upon exercise?

When a call option is exercised by the buyer, the seller of the call option is obliged to deliver the underlying stock to the buyer at the agreed-upon exercise price. This fundamental aspect of options trading is rooted in the contract between the buyer and seller of the option. The buyer of the call option has the right to buy the stock at the exercise price, while the seller accepts the obligation to provide the stock if that right is exercised.

In this scenario, the seller must ensure they have enough shares or the ability to acquire them to fulfill this obligation. If the seller fails to deliver the stock upon exercise, there can be significant financial repercussions, reinforcing the need for sellers to manage their positions carefully. Thus, identifying the seller's role clearly highlights the mechanics of options trading and the respective responsibilities of both parties involved.