Last updated: September 26, 2022

What do BTO, STO, STC, BTC mean in stocks?

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What do BTO, STO, STC, BTC mean in stocks?

BTO, STO, STC, BTC in stocks mean they are different types of market orders which you place with your broker.  

A market order is buying or selling something in one of the various markets available to you. Back in the day very rich people phoned their guy, it was usually a guy, and he placed the order on pieces of paper.

Nowadays of course market trades by retail investors can be done on a smartphone app with all the heart-stopping action a misclick can bring.

BTO, STO, STC, BTC meaning in stocks

BTO: "Buy To Open" 

Buy in order to establish a new long position. 

You buy something, you actually spend money, such as cash in your account for example. 

In this case you are buying something that you expect will rise in value, this is called going “long” and is a bullish position (bull up, bear down).

You will be buying something like shares or a call option as this is the option you buy when you are bullish and are expecting the market to rise.

A position is a bet in many ways, a stance, an opinion backed by money. 

By opening a position you are putting your money into the market and you hope that when you close your position and take your money out of the market that you will make a profit.

Opening a position is a lot more palatable at dinner parties or to your family, friends, romantic partner than I bet on ABC stock.

You bought shares in ABC stock at $15. Or perhaps you bought call options in ABC stock for $1 per share, call options are always done in batches of 100 shares, so you have spent $100 to open this position.

What do BTO, STO, STC, BTC mean in stocks- BUT TO OPEN, BUT TO CLOSE, SELL TO OPEN, SELL TO CLOSE

STO: "Sell To Open"  

Sell short in order to establish a new short position. (For stocks, the abbreviation becomes SSHORT). 

Sell short means you are borrowing XYZ shares, selling them on the market for a price, let’s say $10, in the hope that the price falls so that you can buy them back cheaper, let’s say $6 and return the shares to their owner making a profit of $4 per share.  

Again perhaps at dinner parties you might say you will sell them in the “expectation” the prices will rise and that you are not just crossing your fingers.

BTC: "Buy To Close"

The opposite of STO, sell to open

You buy in order to cover or close a short position that you have already opened or bought.

You spent money to open your position, you will hopefully receive more money when you close it making yourself a profit.

From the above example XYZ stock is now at $6 and you will BTC or buy the shares at $6 to close your position and exit the trade, hopefully at a profit.

These shares then get returned to the unknown person or institution you borrowed them from through your broker.

Note that in the world of cryptocurrency, Bitcoin is often also known as BTC, which can cause confusion.

STC: "Sell To Close"

The opposite of BTO buy to open

You sell your position to exit your trade, which is a long position you opened, and hopefully you make a profit in doing so.

For example, you BTO’d, bought to open. Things were looking hairy for a while there and there were times when you couldn’t believe what an idiot you were, but in the end you correctly predicted that ABC stock would rise. 

It is now at $16 per share. You STC, sell to close, your position at $16, netting a profit of $6 per share.

Or 3 days later your call option in ABC stock that you bought for $1 is now valued at $1.50, you can now STC, sell to close, your position for $150 netting you a profit of $50, or 50% which is not too shabby. 

For many people you might be admiring the strength of holding onto an option for 3 days and perhaps you might STC sell to close and make 50% in 3 hours or even 30 minutes.

Conclusion

You will see these abbreviations quite a lot as they are fundamental in the buying and selling of assets, in particular stocks/shares and options. 

They are seen very often on online forums so hopefully this makes things a little clearer.

You might also be interested in What Is The Scalper Expert Advisor? and Everything You Need to Know About A Cash Secured Put Screener



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