The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we’re going to answer the question, “What happens when you close an option?” This is actually a question we get often and the short answer is nothing. Nothing happens when you close an option because if you are closing the option order, whether it was on the buy side or the sell side, if you have now completed the trading loop as we like to refer to it here at Option Alpha, then nothing happens and the position is closed and done with. If you sell to open, then you would have to buy to close and once you do that, you’re done. You’ve completed the trading loop. If you buy to open, you would have to sell to close, but again, once you do this, you are done and you’ve completed the trading loop. There’s nothing else that happens after a contract is closed. If you have truly removed the contract and all of the positions around it, then you don’t have to do anything. The position’s closed and you’re free to move onto th