Trading options lets you profit from price moves without requiring you to own the underlying security. Options are derivatives that are one step removed from the underlying security. Options are traded on stocks, exchange traded funds, indexes and commodity futures. One reason options are popular with traders is that they are less expensive to trade than the underlying security. Option traders have more choices when it comes to opening and closing a trade than put investors do. Buy to open and buy to close option transactions are designed to take advantage of upward and downward trends. One option controls a fixed amount of the underlying etrade. For example, one option controls shares of stock. You can trade two types of options -- calls and puts. A call gives you the right etrade buy the underlying security, while a put gives you the right to sell. However, unlike stocks, options are wasting assets. Use the buy to open transaction order when you want to purchase a call or put option. Buy to open lets you establish a long or short etrade in the underlying security. The option premium is immediately debited from your account. To profit, the underlying security price must either increase enough to push the call option price past the break-even point or fall enough to drive the put option price below the break-even point. To close out the trade, you must buy the call or options option back using a sell to close transaction order. The options to close transaction order is used to close out an existing option trade. The trade was originally opened using a sell to open transaction order by which you sold a call or a put. This placed you in a short position regarding the underlying security. When you are ready to exit the trade, the buy to close transaction order closes out your short position. For a put trade to profit, the underlying security price must fall enough to drive the put option price below the break-even point. When you establish a short option position, you are credited with the option premium. The short position also makes you vulnerable to large losses should the trade move swiftly against you. As more the price of the underlying security continues to rise, the greater your loss will be. She received a bachelor's degree in business administration from the University of South Florida. Each week, Zack's e-newsletter will address topics such as retirement, put, loans, mortgages, tax and investment strategies, and more. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating buying. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm. Visit performance for information about the performance numbers displayed above. Skip to main content. Buy to Close Options Buy to Open vs. Buy to Close Options. More Articles What Is Meant by 'Buy to Close'? How to Trade High Volume Call Options for Profit How to Buy Stocks After They Close on Fridays How to Trade NASDAQ Index and ETF Options How to Buy TSX Stocks Online Expiration Day Mistakes to Avoid with Options. How Options Work One option controls a fixed amount of the underlying security. Buy buying Open Transactions Use the buy to open transaction order when you want to purchase a call buying put option. Buy to Close Transactions The buy to close transaction order is used to close out an existing option trade. Buy to Close Risks When you establish a short option position, you are credited with the option premium. Understanding Stock Options The Options Guide: Options Transactions Fully Informed: Understanding Etrade Naked Puts. About the Author Based in St. Recommended Articles Funding to Buy Buying How to Buy Dow Jones Futures Options How to Avoid the Most Common Stock Option Mistakes How to Buy Stock Contracts. Related Articles How to Use the Proceeds of a Stock Sale to Buy New Stocks How to Buy a First Stock put E-Trade How to Buy and Sell Energy Futures How to Buy an ETF During Extended Trading Hours How to Buy Stock Calls. Money Sense E-newsletter Each week, Zack's e-newsletter will address topics such as retirement, savings, loans, mortgages, options and investment strategies, and more. Trending Topics Latest Most Popular More Put. Quick Links Services Account Types Premium Services Zacks Rank Research Personal Finance Commentary Education. Resources Help About Zacks Disclosure Privacy Policy Performance Site Map. Client Support Contact Us Share Feedback Media Careers Affiliate Advertise. Follow Us Facebook Twitter Linkedin RSS You Tube. Zacks Research is Reported On: Logos for Yahoo, MSN, Options, Nasdaq, Forbes, Investors. Logo BBB Better Business Bureau. NYSE and AMEX data is at least 20 minutes delayed. NASDAQ data is at least 15 minutes delayed.
The ugly side of option trading with etrade (3 mins)
The ugly side of option trading with etrade (3 mins)
Alcohol Treatment Trial (Ukatt): Hypotheses, Design and Methods.
It also provides real-time error feedback to help you learn quickly and efficiently.