What is 'Sell To Close'

Sell to close, in options trading, is an order to sell an option that you own and terminate your position. Sell to close specifies that you want to sell the option in order to close your existing long position in the option. This is in contrast to sell to open, which means you intend to initiate a short position in the option by writing it.

BREAKING DOWN 'Sell To Close'

The options market is unusual in that a retail investor can participate in the market by buying options and by writing options. It is important to correctly close out long options positions by specifying sell to close. If sell to open is specified instead, then the broker will enforce the margin requirement for a naked short while the original long position remains open.

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