Buy To Open
A "buy to open" is often used when you want to pray that you'll make money in the options market by purchasing a call (predicting the price of a stock will go up) or a put (predicting the price will go down).
The cost of the option will be debited from your account, and then you will wait to see if your predictions are correct. You will make a profit if the stock price goes higher than your break-even point on your call option, or fall below your break-even point for your put option. Once that happens, you need to buy the call or put option back using a “sell to close” order.
If you are simply buying a particular stock for the first time, your first transaction is also a “buy to open” in order to include it in your portfolio. When you sell all your holdings for the stock, that is the sell to close. Very different from "Sell Two Clothes," which you'll find all over the place on eBay.
Related or Semi-related Video
Finance: What are Limit Order, Sell Limi...4 Views
Finance a la shmoop what is a limit order? you want to sell a thousand shares
of Colonel electric it was demoted after they cut their dividend the shares have [Scissors cuts dividend in half]
been trading wildly between $15 and $25 a share you don't want to feel like a
moron for having sold them at fifteen bucks when six weeks later they kissed
25 with tongue so what do you do well you put in a limit order that is you put
a limit of a minimum price of 25 bucks a share for Colonel Electric such that [Pile of stocks appear]
those shares will simply sit in your account unsold maybe forever until
somebody out in the wild blue yonder of Stockland is willing to pay twenty five [Woman standing at a colonel electric stand]
dollars or more for the shares where you have a minimum price limit of 25 bucks a
share in your order so here's to hoping they sell and don't get further demoted [Man carries stock into car]
Sargent Electric is just a place you don't want to go
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