When you Buy-To-Open an options contract, you are initiating a new position. This is in contrast to a sell-to-close order, which would be used to exit an existing position. By using a buy-to-open order, you are telling the market that you want to establish a new long call or put position.There are several reasons why buying to open might be preferable over selling to close. Perhaps the most obvious reason is that it allows investors more flexibility when it comes time to manage their positions. For example, if prices move against an investor's original expectations, they may find it easier (and less costly) to simply let the option expire than they would if they had originally sold the option and then needed to cover their short position at a later date.Another advantage of buy to open options contracts rather than selling them is that doing so gives investors more exposure potential upside (or downside) movement in the underlying security. When you sell an option contract, your potential profits are capped at the premium received for writing the contract; but when you buy options contracts-even if they eventually expire worthless-your loss is limited only by how much money you paid for them initially.
