Chapter 8 Closing Positions: Profit, Exercise, or Roll

Don’t wait for the Last Judgment. It takes place every day.

̶̶ Albert Camus, The Fall, 1956

Every option will be canceled by a closing transaction (a sell order against an original buy, or a buy order against an original short), by exercise, or by expiration. The results of each affect buyers and sellers in different ways.

A “long” option is buying. You buy a call hoping the underlying price moves up, or you buy a put hoping the underlying price will go down. A long option is bought, and it is closed with a sell order.

A “short” option is selling. You sell a call hoping the underlying price moves down, or you sell a put hoping the underlying price will go up. A short position is sold and ...

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