Sell To Open

See: Sell to Close.

Sometimes, when a trader sells an option or futures position, they're doing it to close out a position. They own a call or a put that they want to get rid of...so they're selling it. That situation defines "sell to close."

The opposite circumstance applies for "sell to open" transactions. In these cases, the trader is making a particular bet when they sell the options contract. They aren't closing a position; they're opening one.

The sale might be part of a larger strategy. The premium earned from selling the option or futures contract might be used to buy another contract somewhere else. Or they might just be using it to generate income, hoping it won't get exercised.