Where does the volume in options comes from?

F&O
1

I’m curious how all the buying and selling happens in options. Where does the “free float” if you will comes from? The units that people are buying and selling, where did they originate from?

Say, a new option is created today ABC and I want to buy it. Who will sell it to me (the first buyer)? Who owns it to be able to sell? And how will the price be determined?

I tried searching for it but couldn’t find an answer.

2

the options you buy come from writers who create contracts and sell them into market. the price of options is determined by market dynamics like supply demand & other more complex pricing models. the free float concept doesn’t directly apply to options since contracts can be continuously created and closed based on market needs.

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