Opening and Closing Transactions

What this video covers

• How buy to open creates a long position, sell to open creates a short position, sell to close eliminates a long position, and buy to close eliminates a short position
• Why opening transactions increase open interest and closing transactions decrease open interest
• The exam trap that separates sell to open from sell to close, even though both transactions use the word sell
• The three ways an option position ends: a closing transaction, exercise and assignment, or expiration
• Why closing in the secondary market is the most common way to exit an options position, and why most options are not exercised
• How the Options Clearing Corporation (OCC) routes an exercise notice and assigns a writer
• How a writer can avoid assignment by buying to close before the holder exercises, and what happens when an option expires out of the money