It can decrease or leave open interest unchanged, depending on whether the buyer is also opening or closing a position.
You expect the underlying asset's price to rise (bullish).
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
You expect the underlying asset's price to fall (bearish). 2. Sell to Close (STC): Exiting the Trade
You relinquish your rights and realize a profit or loss based on the difference between your initial BTO premium and the current STC premium. It can decrease or leave open interest unchanged,
This order is used to a position you previously opened via BTO. When you execute an STC order: Action: You sell your existing contract to another party.
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 Result: You become the "holder" or "buyer" of the option
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