Buy To Close Option Example – Confirmed

If you’ve made 50–80% of the max profit, many traders BTC to "take the money and run."

Think of it as the "undo" button for a trade where you started by collecting cash upfront. buy to close option example

Imagine it’s . You think Stock XYZ (trading at $105) won’t drop much further. The Opening Move (Sell to Open): You sell one $100 Put Option expiring in a month. You receive $300 in premium immediately. Status: You are now "Short" 1 Put. The Wait: Two weeks pass. Stock XYZ rises to $110. If you’ve made 50–80% of the max profit,

You might BTC right before an earnings report or a major news event to avoid volatility. The Opening Move (Sell to Open): You sell

Because the stock went up, that $100 Put you sold is now less valuable. It is now trading for only . The Closing Move (Buy to Close):