Buy To Open

Filed Under » , ,
Dictionary Says

Definition of 'Buy To Open'

A term used by many brokerages to represent the opening of a long call or put position in option transactions. A "buy to open" order has a distinguishing characteristic where the option position is not held short in the account during the transaction. The "sell to close" order is used to exit a position taken with a "buy to open" order.
Investopedia Says

Investopedia explains 'Buy To Open'

The buy and sell terminology for options trading is not as straightforward as it is for stock trading. Instead of simply placing a "buy" or "sell" order as they would for stocks, options traders must choose among "buy to open," "buy to close," "sell to open," and "sell to close." Beginning options traders should ensure that they understand the terminology and that they place their orders carefully to avoid preventable mistakes.

Related Definitions

Search results for

'Buy To Open'

  • What do the phrases "sell to open", "buy to close", "buy to open" ...

    http://www.investopedia.com/ask/answers/04/022604.asp
    ... Feedback Feedback. What do the phrases "sell to open", "buy to close", "buy
    to open", and "sell to close" mean? The confusing terminology ...

  • Options Trading Volume And Open Interest

    http://www.investopedia.com/articles/optioninvestor/04/060904.asp
    ... If you later wanted to repurchase the options, you would enter a transaction
    to buy to close. Open interest would then decrease by 10. ...

  • Forex Tutorial: How To Trade & Open A Forex Account | Investopedia

    http://www.investopedia.com/university/forexmarket/forex8.asp
    ... A futures contract, on the other hand, creates the obligation to buy the currency ...
    and Options Basics Tutorial.) Types of Orders A trader looking to open a new ...

  • Prices Plunging? Buy A Put!

    http://www.investopedia.com/articles/optioninvestor/120401.asp
    ... Brokers use this confusing terminology because when you buy puts, you can be
    buying them either to open a position or to close a position. ...

  • New Wheels: Lease Or Buy?

    http://www.investopedia.com/articles/pf/05/042105.asp
    ... With an open-end lease (also known as an equity lease), you must purchase the car ...
    Conclusion The decision to lease or buy will always depend on your personal ...

  • Options And Futures Frequently Asked Questions | Investopedia

    http://www.investopedia.com/ask/options-and-futures/
    ... What do the phrases "sell to open", "buy to close", "buy to open", and "sell to
    close" mean? View Answer; Why do some mergers and acqusitions fall through? ...

  • The Buy-Side Of The M&A Process

    http://www.investopedia.com/articles/stocks/07/buyside_m_and_a.asp
    The Buy-Side Of The M&A Process. ... Rather, effective M&A advisors will ask whether
    the potential target is open to exploring a "strategic alternative" or a ...

  • Using Open Interest To Find Bull/Bear Signals

    http://www.investopedia.com/articles/technical/02/112002.asp
    ... When open interest is high at a market top and the price falls off dramatically ... Find
    out how to build these charts showing buy, sell, stop-loss and take-profit ...

  • 5 Common Misconceptions About ETFs

    http://www.investopedia.com/articles/exchangetradedfunds/11/worst-etf-misconceptions.asp
    ... securities. For this reason, they can be much cheaper to buy than open-ended
    mutual funds-as long as a large amount is being traded. For ...

  • Intro To Open Interest In The Futures Market

    http://www.investopedia.com/articles/technical/02/110602.asp
    ... The Bottom Line Open interest can help futures traders get a sense of whether the ...
    Find out how to build these charts showing buy, sell, stop-loss and take ...

Related Articles

Partner Links