Options trading buy to open buy to close
Positions can be long or short. When close purchase items such as stocks, bonds, options and close, you have a long position. Option traders commonly use the phrase. A short sale of a stock or bond involves borrowing and selling the security, hoping to repurchase and replace it at a lower price. It is a bearish strategy. Instead, you take on an obligation that buy the delivery of the underlying asset. With options, the obligation is contingent on how the price of the underlying asset behaves. You buy to close a contract position to lock in a profit, limit a loss and absolve yourself of your delivery obligation. For call options, intrinsic value comes when the price of the underlying asset exceeds the strike price -- the agreed selling price of the asset. An in-the-money put option has the reverse relationship. American-style options can be exercised any time until expiration, which means a short-seller may be assigned a delivery before the option expires. If you write a call that is assigned, you must deliver the asset at the strike price. If you write a put, you must buy the asset at the strike price if the put is assigned. At any time before expiration, you can issue a buy-to-close order that ends your exposure to subsequent gains or losses and removes your obligation to make or take delivery. The two positions net out to zero, and you are off the hook. The price of the options contract at the time of the offset, relative to the money you collected when you wrote the option, determines your gain or loss. For example, if you options 1, shares of stock, you borrow the shares from a broker and open them on the stock market. When you wish to end your short position, you buy back the shares to cover the short sale. After buying back the shares, you return them to the lending broker. If you buy the shares for less than their original cost, you pocket the difference as a capital gain. Based in Chicago, Eric Bank has been writing business-related articles sinceand science articles since His articles buy appeared in "PC Magazine" and on numerous websites. He holds open B. He also holds an M. Buy week, Zack's e-newsletter will address topics such as retirement, savings, loans, mortgages, tax and investment trading, and more. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating options. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm. Visit performance for information about the performance numbers displayed above. Skip to main content. What Is Meant by 'Buy to Close'? More Articles Buy to Open vs. Buy to Close Options How Do I Exit Stock Options Buy Back? Short Positions A short sale of a stock or bond involves borrowing and selling the security, hoping to repurchase and replace it at a lower close. Types of Option Orders -- Introduction Investor Place: Put and Call Writing Explained TradingConcepts: Exiting an Option Position ETrade: Sell-Short and Buy-To-Cover Orders. Four Ways to Exit a Trade TradeKing: How to Avoid the Top 10 Mistakes New Option Traders Make. About the Author Based in Chicago, Eric Bank has been writing business-related articles since options, and science articles since Recommended Open How to Protect Yourself From Stock Market Gaps What Are Stock Market Short Positions? Related Articles Minimum Margin for Futures Are Stock Warrants Long-Term Capital Gains? What Is Long Stock Value? What Happens buy Stock Option Prices When the Stock Price Increase? Money Sense E-newsletter Each week, Zack's e-newsletter will address topics buy as retirement, savings, loans, mortgages, tax and investment strategies, buy more. Editor's Picks Can You Rollover an Inherited Qualified Annuity? Is Options Trading Reported to IRS? Trending Topics Latest Most Popular More Commentary. Quick Links Services Trading Types Premium Services Zacks Rank Research Personal Finance Commentary Education. Resources Help About Zacks Disclosure Privacy Policy Performance Site Map. Client Support Contact Us Share Feedback Media Careers Affiliate Advertise. Follow Us Facebook Twitter Linkedin RSS You Tube. Zacks Research is Reported On: Logos for Yahoo, MSN, MarketWatch, Nasdaq, Forbes, Trading. Logo BBB Better Business Bureau. NYSE and AMEX data is at least 20 minutes delayed. NASDAQ data is at least 15 minutes delayed.
It is my sincere hope that you think of a solution or two and that you will act - at the very least that you will spread the ideas around.
So, to achieve its goal, government must undermine the Family.