I often hear about sell to close and sell to open but I am unsure which is more effective.
I have been trading for a while but mainly focus on buying options. I have not explored selling much.
Does anyone have experience with both? Which one do you like better and why?
Both strategies have their place, but it really depends on the market conditions. In a volatile market, selling to open can be more profitable as premiums increase. You get to keep the premium if the options expire worthless. Just ensure that you have enough capital to manage the assignment risk that comes with it. On the other hand, selling to close is about managing your existing positions. Always focus on learning the right entry and exit points before diving into selling strategies, as the dynamics change significantly.
Getting into selling to open was a game-changer after Tesla calls destroyed me last year.
Now I sell puts on stocks I’d buy anyway and collect premium upfront. Made $340 last month when Apple dipped.
Sell to close? Just closing out existing positions. Not exciting, but that’s how you actually lock in profits.
Buying options feels safer, but selling actually limits your risk if you do it right.
When you sell to open, you’re basically the house collecting money upfront. Just watch out for assignment.
I’ve seen way more success selling puts near support levels than trying to nail the perfect call timing.
Sold puts on EURUSD last week - easy $180 in premium.
Sell to open brings in cash from premiums. Sell to close gets you out of positions.
• STO: You’re writing puts/calls for credit
• STC: You’re closing long positions you already own
STO needs margin. Manage assignment risk.