Investopedia

Continue to Site »

Buy To Close

Filed Under »
Dictionary Says

Definition of 'Buy To Close'

The closing of a short position in option transactions. Buying to close involves taking an opposing position from the short position which is no longer desirable, in order to synthetically close out exposure to the position. The new long position's performance should net out with the short position's. It's a strategy used by many brokerages.
Investopedia Says

Investopedia explains 'Buy To Close'

Investors can buy to close either puts or calls, or a combination of the two, and thus will be relinquishing obligations associated with the option(s). The distinguishing factor of a buy to close is that the option position must have been held short in the account during the transaction. This is a common practice as it is not uncommon for option positions to be closed prior to maturity.

Articles Of Interest

  1.

    Options Basics Tutorial

    Discover the world of options, from primary concepts to how options work and why you might use them.

  2. What do the phrases "sell to open", "buy to close", "buy to open", and "sell to close" mean?

    The confusing terminology mentioned in the question deals with entering and exiting option orders. In review, there are two main ways in which you can participate in options, you can either buy ...

  3. Making It Big On Wall Street

    Read about some of the most glamorous Wall Street jobs and what it takes to land one.

  4. Quants: The Rocket Scientists Of Wall Street

    Blend math, finance and computer skills to command a high - and well deserved - salary.

  5. Build A Baby Berkshire

    Get a piece of Warren Buffett's profit by using Form 13F to coattail his picks.

  6. Cash: A Call Option With No Expiration Date

    Cash is generally regarded as a drag on investment returns, but sometimes it may be preferable to hold a substantial cash amount instead of investing it in other assets. This is because having ...

  7. Should You Add A Securities License To Your Qualifications?

    Clients love planners who sell securities, but a securities license takes a lot of work. Learn if the stress and study are worth it.

  8. Business Grads, Land Your Dream Job

    Companies are in need of strategic candidates, not walking resumes. Find out how to set yourself apart from the pack and land the business career you've always wanted.

  9. Exploring Non-Dollar Currencies For Forex Trading

    Learn how investments in foreign currencies can diversify your portfolio.

  10. Financial Solutions For Young Women

    Break through the stereotypes and find out how to manage your life to meet your needs.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  2. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  3. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  4. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  5. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  6. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.
Trading Center