opening transaction

Opening Transaction

The initial or primary transaction of an options contract. Rights for a buyer are created as is the obligation of the seller.

Notes:

For example, by writing a call option, an investor is making the opening transaction--this person has created a right for the buyer to exercise the option.

See also: Assignment, Call Option, Exercise, Option, Options Contract, Put Option

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Opening transaction

Applies to derivative products. (1)Buy or sell transaction that creates a position out of a flat one (writing an option short or buying an option long). Antithesis of closing transaction. (2) First transaction of the day in a stock.

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opening transaction

1. The initial transaction during a trading day for a particular security. The price at which an opening transaction takes place is important to investors who have placed market orders before the market opens or who have placed at-the-opening orders, because the price at which the opening transaction takes place is the price that these investors will pay for or the price they will receive for the security. Compare closing transaction.

2. An option order that establishes a new investment position or that increases the size of an existing investment position. Compare closing transaction.