Since options are written by brokers and brokers prefer getting boney to giving money, are the options that are actually used written by bad brokers? Is there a way to find out who is writing what options?
Options are not typically written by brokers. When an option is written, an individual or a firm is taking a directional bet on an option. For example, if you write a call, you are essentially short a call.
Brokers for the most part do not take trading positions, but rather profit off of commissions (spread in the FX market). If a broker were to write an option, they would be taking a directional trade, which is something most brokers do not do.
Options are standardized in most financial markets. This means that there is no way to determine the creditworthiness of those who write them. However, to my knowledge, there are very few "bad" options trading through exchanges. The biggest concern would be trading options that are purely contract based (like a bank creating an option with a gold mine) rather than exchange-traded.
