In options trading, "Buy to Open" (BTO) and "Sell to Close" (STC) are the two halves of a standard . They describe the lifecycle of a trade where you purchase a contract first and exit it later by selling it. 1. Buy to Open (BTO): Entering the Trade
You pay a premium (debit) to a seller to acquire the rights of a contract. Result: You become the "holder" or "buyer" of the option. buy to open sell to close
Most traders use STC to capture the option's remaining extrinsic value (time value and volatility) rather than exercising, which only captures intrinsic value. Comparison Summary Master the Basics: 4 Key Options Trading Strategies In options trading, "Buy to Open" (BTO) and
It can decrease or leave open interest unchanged, depending on whether the buyer is also opening or closing a position. Buy to Open (BTO): Entering the Trade You
This order is used to a position you previously opened via BTO. When you execute an STC order: Action: You sell your existing contract to another party.