This order is used to a position you previously opened via BTO. When you execute an STC order: Action: You sell your existing contract to another party.
You pay a premium (debit) to a seller to acquire the rights of a contract. Result: You become the "holder" or "buyer" of the option.
You relinquish your rights and realize a profit or loss based on the difference between your initial BTO premium and the current STC premium. buy to open sell to close
It can decrease or leave open interest unchanged, depending on whether the buyer is also opening or closing a position.
You expect the underlying asset's price to fall (bearish). 2. Sell to Close (STC): Exiting the Trade This order is used to a position you
You expect the underlying asset's price to rise (bullish).
It typically increases open interest , as a new contract is often being created between you and a seller. Strategic Intent: Result: You become the "holder" or "buyer" of the option
Most traders use STC to capture the option's remaining extrinsic value (time value and volatility) rather than exercising, which only captures intrinsic value. Comparison Summary Master the Basics: 4 Key Options Trading Strategies