··¤(`×[¤ Oreo in Leeds ¤]×´)¤·· -- @'-"@.
Group Blog
All blogs

What do the phrases "sell to open", "buy to close", "buy to open", and "sell to close" mean?

What do the phrases "sell to open", "buy to close", "buy to open", and "sell to close" mean?

The confusing terminology mentioned in the question deals with entering and exiting option orders. In review, there are two main ways in which you can participate in options, you can either buy an option or write an option. When you buy an option you are buying the right to either buy (call option) or sell (put option) the underlying asset at a set price before a set date. If you write an option, you are selling this right for a premium.

When you enter a trade, you are essentially opening a position, hence the orders "sell to open" and "buy to open." If you are buying an option, either a put or a call, you must enter a "buy to open" order. If you are writing an option, also referred to as selling an option, you must enter a "sell to open" order.

Now, to exit an order, you need to close your options position. If you bought an option, you need to use a "sell to close" order, which is essentially like owning a stock where you sell it back into the market to close the position. If you wrote an option, you will need to use the "buy to close" order. While it may seem odd that you would buy to close a position, by taking a long position in the option, you neutralize the rights you sold when you wrote the option with the rights gained when you buy the new options, which closes your position.

In summary, a person holding a short position (contract writer) can sell to open (enter a contract) or buy to close (close a position). A person holding a long position (contract purchaser) can buy to open (enter a position) or sell to close (close a position).


Create Date : 14 มิถุนายน 2550    
Last Update : 14 มิถุนายน 2550 17:43:09 น.
Counter : 232 Pageviews.  

Can an open-ended fund's price appreciate significantly?

Can an open-ended fund's price appreciate significantly?

Theoretically, open-end mutual fund prices can experience a significant increase in price. However, three factors need to be considered to provide a practical answer to the question.

First, open-end mutual fund shares are priced at their net asset values (NAV), which are computed on a daily basis by dividing the total dollar amount of all the securities in a fund's portfolio, less any liabilities, by the number of fund shares outstanding after market close. In effect, it is the value of the underlying securities in a fund's portfolio that provides the basis for a mutual fund's pricing. Because fund shares are issued to (sold) and bought back (redeemed) from fund investors by the fund company, fund share prices are not subject to the buying and selling forces of the market, which tend to exert wider price swings than NAV pricing.

Second, most open-end mutual funds have portfolios that are quite diversified, which cushions the impact of dramatic price movements, positive or negative, in a portfolio's holdings. Over the short term, generally speaking, "significant" price increases are not typical of open-end fund shares.

Lastly, in view of the above, mutual fund stock and bond prices should experience less volatility than individual equity and fixed-income securities. Nevertheless, within the fund universe, certain categories of funds are subject to price movements that are greater than others because of the nature of their holdings and investment style. For example, Vanguard's large-cap value stock fund (U.S. Value Fund) recorded a five-year (2002-2006) NAV appreciation of 29%, while for a similar period, Century's small-cap growth stock fund (Small-Cap Growth Fund) had a 67% NAV appreciation.

It should be noted here that an open-end mutual fund's performance needs to be judged by its total return, both annually and over extended periods of time, and not its net asset value. Because funds must pay out their income and capital gains on an annual basis, fund investors look for benchmarks and assess whether peer funds are beating total returns, rather than net asset value performance.


Create Date : 14 มิถุนายน 2550    
Last Update : 14 มิถุนายน 2550 16:51:57 น.
Counter : 124 Pageviews.  

Location :
Leeds United Kingdom

[Profile ทั้งหมด]

ให้ทิปเจ้าของ Blog [?]
Rss Feed

ผู้ติดตามบล็อก : 1 คน [?]

เด็กขำๆ ที่มีสาระ (น้อย) ชอบอ่านข่าวเศรษฐกิจและคลายเครียดด้วยหน้าบันเทิงไทยรัฐ ^-"

Article ที่นำมานี้ส่วนใหญ่เอามาจาก Post Today, วารสารทางการเงินต่างๆ, และจากเว็บไซท์ต่างๆ ซึ่งเราเห็นว่าน่าสนใจค่ะ ขอบคุณแหล่งที่มาด้วยค่ะ

ป.ล. มีบางบทความเขียนเอง ลง Post Today กับ Manager ด้วย เจ๋งปะ

Image Hosted by ImageShack.us

Friends' blogs
[Add Steff's blog to your web]

 Pantip.com | PantipMarket.com | Pantown.com | © 2004 BlogGang.com allrights reserved.