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

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we're going to be talking about the differences between selling to close and writing an option contract. Now, there's a very subtle distinction between these two terms or phrases that you have to understand and it just comes down to understanding who's on what side and what action is being performed. With regard to selling to close, this would imply that you are first closing a position. If you sell to close something, that means that you might have had something to begin with and therefore, you're removing the position or closing it. When you see sell to close, that means that the trader had a buy to open as the original position. They were long option contracts. If you're long option contracts and you performed a buy to open, that means that to reverse that trade, you would have to perform a sell to close order which is just a really fancy way of just saying you removed and closed the position. Now, when it co