: When you pay that $5,000 to get that contract, you have "bought to open" your position. You didn't own a contract before; now you do. Two possible endings to the story:
Instead of buying the house right now, you pay the owner a (the premium ) for a contract that gives you the right to buy that house for $1,050,000 (the strike price ) anytime in the next 30 days. buy to open example
"Buy to open" is the action of purchasing a new options contract to establish a "long" position. It is the most common way beginners start trading options because it functions similarly to buying a regular stock—you pay money upfront for the right to profit if the price moves in your favor. A Helpful Story: The Real Estate Reservation : When you pay that $5,000 to get