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What does “Buy to Open” Mean?
When trading options, the language is slightly different than other transactions. You might be “opening” or “closing” a position with each trade.
If you buy a put or call option, your ticket with say “buy to open” since you are opening a position and increasing the open interest on the underlying. Open interest is similar to trade volume in the stock markets, but it only increases with the number of outstanding positions interested in the outcome of the movements of the underlying security, and does not increase with each trade like trading volume.
Since some of the trades will “close” a position which was open, these will subtract from the aggregate open interest. If an investor decides to get out of his or her open position, he or she can sell the option to close the position, and the ticket would read “sell to close.” It is possible to “sell to open” if the sale creates an open short position. In that case, the investor would “buy to close.”
What does “Buy to Close” Mean?
What Does 'Buy to Cover' Mean?
What does “Buying on Weakness” Mean?
What Should I Know About Roth IRAs?
Roth IRAs are a very popular and useful accumulation vehicle, and there are some things you should be aware of
What is a Registered Investment Advisor (RIA)?
An RIA is an asset manager that is registered with the SEC (in whatever state(s) they operate)
What does “Buy-Side” Mean?
The “buy side” refers to businesses in the financial services industry such as pensions, mutual funds, and asset managers
How to use Momentum Indicators in trading
When the momentum indicator crosses above the zero line it could be an indication that the security has upward momentum and could chart a higher course
Can I Withdraw Money From My Pension Plan?
In general, you can’t withdraw money from a Pension Plan before you retire
What is Required Rate of Return?
Required Rate of Return is the return that investors will expect to earn on their money, given the risk and costs involved
What is the Federal Energy Regulatory Commission?
The FERC oversees the interstate commerce surrounding oil, energy, and natural gas
What is Foreign Investment Funds (FIF) tax?
New Zealand and Australia have a tax for offshore investments that fall into the definition of Foreign Investment Funds