Most traders use STC to capture the option's remaining extrinsic value (time value and volatility) rather than exercising, which only captures intrinsic value. Comparison Summary Master the Basics: 4 Key Options Trading Strategies
You pay a premium (debit) to a seller to acquire the rights of a contract. Result: You become the "holder" or "buyer" of the option. buy to open sell to close
This order is used to a new long position. When you execute a BTO order: Most traders use STC to capture the option's
It can decrease or leave open interest unchanged, depending on whether the buyer is also opening or closing a position. This order is used to a new long position
You expect the underlying asset's price to fall (bearish). 2. Sell to Close (STC): Exiting the Trade
In options trading, "Buy to Open" (BTO) and "Sell to Close" (STC) are the two halves of a standard . They describe the lifecycle of a trade where you purchase a contract first and exit it later by selling it. 1. Buy to Open (BTO): Entering the Trade