Opening Sale

An opening sale is an options trade where you sell a contract you did not previously own, in order to create or add to a short position in that specific option series (a series being a particular underlying stock, expiration date, strike price, and type — call or put, all together).

Every options order has two parts: whether you're buying or selling, and whether it's opening or closing. An opening sale means you are the one writing the contract into existence for that position — you're taking on the obligation that comes with being short an option (for example, the obligation to sell shares if a call you wrote gets exercised, or to buy shares if you wrote a put). This is different from a closing sale, where you already own the contract and are simply selling it to exit a long position you already had.

The nuance that trips beginners up is that "sale" alone doesn't tell you if you're opening or closing a position — your broker's order ticket usually forces you to pick "sell to open" versus "sell to close," and picking the wrong one can leave you with an unintended position or a rejected order. An opening sale also means you're now short that option, which carries margin requirements and, in the case of uncovered (naked) short options, potentially significant risk if the market moves against you, since your loss is not capped at the premium you collected the way a buyer's loss is.

Opening sales are how option sellers ("writers") get paid the premium up front, betting that the option will expire worthless or lose value, letting them buy it back cheaper later or let it expire.