Can options be sold to close?

The option can be sold to close the position. A sell to close order may be made with the option ITM, OTM, or even at the money (ATM). Traders will typically sell to close call options contracts they own when they no longer want to hold a long bullish position on the underlying asset.

What does closing a position mean?

Closing a position refers to executing a security transaction that is the exact opposite of an open position, thereby nullifying it and eliminating the initial exposure. Closing a long position in a security would entail selling it, while closing a short position in a security would involve buying it back.

What is a closing order to exit a long position?

The closing order, either a market or limit, to exit the position is entered when they see price reach 2,605. In both scenarios, the trader is selling to close their long position for profit but may have different outcomes based on the exit strategy they implement to close the trade.

Who initiates a closing transaction?

A closing transaction is generally initiated by a trader but, in some instances, it may also be forced closed by brokerage firms if certain conditions are met. When trades and investors transact in the market, they are opening and closing positions.