Closing Transaction

Closing transaction

Applies to derivative products. Buy or sell transaction that eliminates an existing position (selling a long option or buying back a short option). Antithesis of opening transaction.

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closing transaction

1. The final transaction for a particular security during a trading day. Compare opening transaction.

2. An option order that eliminates or decreases the size of an existing option position. An investor who repurchases three options that have been sold short is entering into a closing transaction. Also called closing purchase, closing sale. Compare opening transaction. See also close a position.

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Closing Transaction

1. Any transaction that closes a position, especially a long position.

2. An option buyer's sale of a second option that cancels out the provisions of the previous option by having the same provisions.