There are FOUR ways in which you can transact an options contract:<ul><li>Buy a call option (Ask side/At the Ask)</li><li>Sell a call option (Bid side/At the Bid)</li><li>Buy a put option (Ask side/At the Ask)</li><li>Sell a put option (Bid side/At the Bid)</li></ul>Let's say you're bullish company ABC. You can buy a call option. When you decide to close the position you would then sell the call option. Now let's say you're bearish on company XYZ. You can buy a put option. When you decide to close the position, you would then sell the put option.Once you've gotten a grasp on the 4 basic ways in which you can transact an options contract it's time to start educating ourselves on the ways the options are being transacted.You can watch a more in-depth explanation with examples straight from the Flow Feed on the Unusual Whales <a href="https://www.youtube.com/watch?v=9g74rfdEILA">Four Ways Options Transact</a> video!--Let's simplify the 4 ways (buy a call, sell a call, buy a put, sell a put)<h2>Buying a contract</h2>Within buying there is:Buying to open (BTO)Buying to close (BTC)<h2>Selling a contract</h2>Within selling there is:Selling to open (STO)Selling to close (STC)The phrases "To open" and "to close" give added meaning and provide additional context to the trade. Every option transacted will either be transacted 'to open' or 'to close'.A "buy to open" refers to a trader buying for themselves a new position (whether it be a call or a put). When the trader is ready to sell (or close) their position they would be "selling to close".A "sell to open" would refer to a trader opening a new position, but being on the short side. Selling (or writing) a covered call/cash secured put would be an example of a 'sell to open transaction.' In order to close a position that was 'sold to open', you would "buy to close".How do you know if something is more likely to be a buy than a sell? The SIDE of a bid/ask spread.&nbsp;Side is a term that you'll see as a column header on the Unusual Whales flow feed. It is most often used to reference where along the Bid-Ask spread a trade took place.&nbsp;&nbsp;<figure class="image"><img src="https://lh7-us.googleusercontent.com/_v8VHNZJuB5P3qUcBWJ0CS6mBQHbQPgXO2LHGMTz8CYFFdIOvO7qNS4Ez-SH1YzdbdXhjEcmbMxRJZtSeGllRoOWlh4PZ1xpo_0gGXURsJiib1DetXN39u8RMy_HUV0SPM8Cj6kUrJUJDNdTN39mskE"></figure>&nbsp;<h2>Sides</h2>Every trade is tagged with a side. There are four possible sides:Ask - A transaction that took place at or closer to the ask will have the side ASK.&nbsp;Bid - A transaction that took place at or closer to the bid will have the side BID.Mid - A transaction that took place exactly between the bid and the ask will have the side MID.None - The previous 3 labels made reference to where along the Bid-Ask spread a trade took place. The NONE tag is used in situations where the Bid-Ask spread may be irrelevant. Cross trades, trades that are out of sequence or late,&nbsp; or trades which have been modified or cancelled will be tagged NONE.One thing to note is: an at-ask fill is not a guarantee the contract is bought, and an at-bid fill is not a guarantee the contract is sold; only a higher likelihood one way or the other. In future articles, we’ll walk through how to make these determinations, but be aware that this education is not a guarantee of accuracy)--Why does this matter?Understanding these concepts is crucial for any trader interested in analyzing flow, and especially for those attempting to follow 'unusual options flow'.What makes distinguishing between 'opening' and 'closing' trades difficult is the fact that they are not expressly labeled as such.Consider that a transaction in which a trader has bought (to close) $1,000,000 in (covered) calls will look very similar to a trader who is buying (to open) $1,000,000 in calls, but the sentiment is wildly different between the two traders.Now we'll go over some examples of clear and unclear analysis of 'opening' and 'closing' flow trades.&nbsp;<h2>Buy to Open Flow</h2><figure class="image"><img src="https://lh7-us.googleusercontent.com/YHdf5_kA_-xMmib4wZzkjSNHECTB96EBTg4kMjxFxXY1X6UWl_13iLh9FgGYXFLdLKDphVbFGYnLtpcxd4IPZ0Te3qxA_VHQsZGGtpto9wu40TBAbfAR8A7kM7F37wnRT6K_sAnsR_wkc04CxeOuZ_M"></figure>Here, we see a number of orders that hit the tape at or near the ask price. For this example of an at-ask opening trade, we’re looking at the $EVA $0.5C 03/15/2024. The Bid/Ask spread for this trade was $0.15 - $0.20. Directly to the right of that, we see the Spot (or Fill) price was $0.20 - right at the ask. Additionally, the Size of the trade was 470 contracts, while the Open Interest was 0. Therefore, we know this is an Opening trade (Size &gt; Current Daily Volume + Open Interest).&nbsp;Below that, we have an example of a near-the-ask opening trade. Ticker $CRON in the bottom example; $CRON $4C 1/16/2024 hit the tape with a Bid/Ask spread of $0.25 - $0.35. The Spot/Fill price was $0.33. While this isn’t an exact ask-fill, the sentiment can remain more or less the same here; the fill occurred significantly closer to the Ask price than it did the Bid price. We also know once again that this is an opening order, as the 100 contract size of the order is greater than the sum of the total prior daily volume and existing open interest.Both of these trades potentially have the sentiment of Bullish positioning. Note, however, that this is not an exact science. At-ask and near-the-ask fills are not a guarantee of contracts being bought–the likelihood is higher that they’re bought, but again, this is not guaranteed.<h2>Sell to Open Flow</h2><figure class="image"><img src="https://lh7-us.googleusercontent.com/7W4JBPo2TnoTElDvty97D1tS2tAWkK46cUkg427-kwkesOXDkg8Hv80Mnz13Np2NS3O1PzvxWIK2I6Qne_f7IfnYLnvhU5djcvl1rZv_q9FkKAkmyqaqGxZrlSlD2Bft7rP0Czori-2_4qXKIFh2SWE"></figure>The process of scoping out Sell to Open trades is identical to that of Buy to Open trades, only we’re looking for at-the-bid or near-the-bid transactions. For this At the Bid example, we’ll be looking at the $CHWY $21.5P 2/2/2024. The Bid/Ask spread at the time of this order was $2.45 - $2.49. To the right, we see the Spot/Fill of this order occurred right at the Bid of $2.45 per contract. The Size was 175 vs only 67 OI, and combined with the fact that this order size was greater than total prior daily volume and Open Interest combined, we can deduce this is an opening trade.Now for the $LLY $617.5P 2/2/2024. The Bid/Ask spread sat at $8.15 - $8.80. Our Fill came in at $8.20; not at-the-bid, but very close given the wide spread. Again, comparing the Size of the order to the pre-existing volume and open interest, we can deduce that this was an opening trade.<h2>Buy to Close</h2><figure class="image"><img src="https://lh7-us.googleusercontent.com/IYEuJ_6xH7vS7NwVMUwY5Q82WXKO4Q4cIYcvKF5U_nSlkcUT2sfbZI8NfYFg_jGj8K_5jbg-gRdjm4BZtqSZeLplvaPhcROObON7N3LqYuGfpoWdRUERBzdYZeaSfY27EzFQeF5pS94usXXTWTffC1c"></figure>For Buying to Close, the flow would look similar to the Buy to Open examples above; only in this case we need to have some existing Open Interest–in order for there to be a position closure, there needs to be an existing position to begin with. In the case of this $AAPL $185P 12/29/2023, we noted the entry short on 11/16 when 17.5k volume transacted mostly at the Bid, and open interest rose on 11/17 by just under 16k volume. That position held for 2 weeks, until 12/13 when we noted at-ask fills on the contract, nearly the same amount of volume as our original entry. The next day, on 12/14, we see the open interest drop considerably, confirming our suspicions of at least a partial exit on the initial position.<h2>Sell to Close</h2><figure class="image"><img src="https://lh7-us.googleusercontent.com/h5yuz5vkw_Fb0zdfzaZYBkZpqZ7eTwQS3T4mZCXwHmNjY8XERBTBoosGlCfto5W_nJwdsEskq4zKsnCBsaRQc0RiElKopH1wTR71djREc16BNZZYKMl-b5jlWxL8cqhTEE1Ef-IB-l6ZkjCkHFjX8eE"></figure>Here for Selling to Close, just like the Buy to Close example above, we need to have some existing Open Interest–in order for there to be a position closure, there needs to be an existing position to begin with. In this case with $SPR $23C 11/17/2023, we see a total of 5,066 volume transacting on 11/10 versus 10,078 open interest. The 5,066 volume came in at the Bid price of $1.46. With this, we can’t confirm a position closure until the open interest updates the following morning before market open. In this case, we got exactly that. The Open Interest on 11/13 dropped by 2,324 contracts, giving us the confirmation that a position was at least partially closed.<h2>Related Articles</h2><ul><li><a href="https://unusualwhales.com/information/breaking-down-an-option-contract-chart">Breaking Down An Option Contract Chart</a></li><li><a href="https://unusualwhales.com/information/how-to-read-an-option-contract">How to Read an Option Contract</a></li><li><a href="https://unusualwhales.com/information/what-is-a-spread">What is a Spread?</a></li></ul>

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