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 go through a simple explanation of sell to close when trading options. When you’re getting started trading options, one of the first things that you’ll probably learn how to do is to buy option contracts. Now, we don’t necessarily think this is the best approach, but it’s just naturally where most people gravitate towards. It’s the most universally understood concept in investing, is you buy something when it’s cheap and you hope to sell it eventually when it goes up in price. Many people when they start options trading, they actually start by buying option contracts and they do what’s called a buy to open order. And so, the natural progression of the trading loop is that at some point, you have to sell what you bought in order to realize your potential profit. A lot of things can happen between the buy and the sell and that’s all paper money, that’s all fictitious money until you actually close o