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

Hey everyone. Welcome back to the daily call. My name is Kirk, here again at Option Alpha. On today’s daily call, I want to talk about the difference between buy to open and sell to open for options trading. Now, this one is one that I think a lot of people get slipped up on and it’s just a very subtle difference, but it’s confusing because when you get started in options trading, it’s obviously another dimension if you will. With stock trading, it's very easy to understand. You buy stock and then you sell it hopefully at a higher price. When most people start transitioning, they start realizing that with stock trading, you can actually sell stock at a higher price and buy it back at a lower price and that's called short selling a stock or short trading. The same thing actually happens with option contracts. When you buy to open, you are basically outlaying money, you're buying an option contract to initiate a position or start a position. Now, the catch to that is eventually, you have to sell to close. If yo