Hi, I'm new to this forum. I'm learning option trading and have a question, hope you guys can help me out. thanks a lot in advance! - Trader_A Say, day one, the price of Stock-XYZ is $20, I buy 1 call option contract(100 shares) of Stock-XYZ with strike price $20 from Seller-A, the option contract expires in 4 weeks. The option costs $50($0.5 a share). In 2 weeks, the stock price go up to $22, and the same call option price go up to $2.5 a share. So I sell the 1 call option at $2.5 a share to Buyer-B, making $200 profit(minus broker fees). In another 2 weeks, the price of Stock-XYZ go up to $24, so on the day the call option expires, Buyer-B exercise his call option: buy 100 shares of Stock-XYZ at $20 a share. Now who has the obligation to deliver the 100 shares at $20 a piece to Buyer-B? Me or Seller-A or who? And why?
Once you sell to close then at that time your net position is flat and you have no obligation past that point. The various buyers and sellers you sell or buy from may even be closing their own positions at that point - it's not something you'll know. When an option holder exercises their option the clearing group randomly assigns to a broker with a seller (a seller who has an open position) the obligation to fulfill the contract's requirements.
After the trade you entered into is compete, the counter party is irrelevant. The OCC and it's member firms are responsible to make sure that the buyer of the contract has his rights and a seller will met that demand. If you were to exercise your options, the seller would be random that has to make delivery.
My guess is you want to know if SellerA still keeps the short position until expiration, then whether SellerA will need to (be liable to) supply the shares. I think the answer would be "Yes, financially". Potentially SellerA could lose ($20-$24=) $4/share. Just 2 cents!