The confusing terminology mentioned in the question deals with entering and exiting option orders. In review, put are two main ways in which you can participate in optionsyou can either buy an option or write an option. When you buy an option you are buying the right to either buy call option or sell put option the underlying asset at a set price before a set date. If you write an option, you are selling this right for a premium. When you enter a trade, you are essentially opening a position, hence the orders " sell to open " and " buy to open. If you are writing an option, also referred to sell selling an option, you must enter a "sell to open" order. Now, to exit an order, you need to close your options position. If you bought an option, you need to use a " sell to close " order, which is essentially like owning a stock put you sell it back into the market to close out the position. If you wrote an put, you will need to use the " buy to close " order. While it may seem odd that you open buy to close a position, by taking a long position in the option, you neutralize the rights you sold when you wrote the option with the rights gained yahoo you buy the new options, which closes your position. When he makes the order through his brokerage accounthe'll enter a buy to open order, thereby opening his position on the option. This means that his open option will be closed when he sells the option. In summary, a person holding a short position contract writer can sell to open enter sell contract or buy to close close a position. A person holding a long position contract purchaser can buy to open enter a position or sell to close close a position. For more information, check out Options Basics Tutorial option Stock Basics Tutorial. Dictionary Term Of The Day. The simultaneous purchase and sale of an asset in order to profit from sell difference Sophisticated content for financial advisors put investment strategies, industry trends, and advisor education. What do the phrases "sell to open", "buy to close", "buy to open", and "sell to close" mean? By Investopedia Staff Updated June 8, — 5: Learn more about options, what options' volume and open interest are and the difference between volume and open interest Learn how option selling strategies can be used to collect premium amounts as income, and understand how yahoo covered Trading options is not easy and should only be done under the guidance of a professional. Learn how these two statistics can give you an edge in trading options. Futures contracts are available for all sorts of financial products, from equity indexes to precious metals. Trading options based on futures means buying call or put options based on sell direction A open place to put with options is writing these contracts yahoo shares you already own. Option long as the underlying stocks are of companies you are happy to own, put selling can be a lucrative strategy. Learn more about stock options, including some basic terminology and the source of profits. All investors should be aware that the best time to buy stocks sell when the market is tanking, according to history. An agreement that gives an investor the right but not the obligation The income received by an investor who sells or "writes" an The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits A performance measure used to evaluate the efficiency of an option or to compare the efficiency of a number of different A general term describing a financial ratio that yahoo some form of owner's equity or option to borrowed funds. The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price. A type of debt instrument that is not open by physical assets or collateral. Debentures are backed only yahoo the general The amount of sales generated for every dollar's worth of assets in a year, open by dividing sales by assets. Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Quizzer Net Worth Calculator. Work With Investopedia About Us Advertise With Open Write For Us Contact Us Careers. Get Free Newsletters Option. All Rights Reserved Terms Of Use Privacy Policy.
Yes, I had to rewind expository scenes to fully understand what was happening.
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