Monday Dictionary Time: BTO, BTC, STO, and STC

On my trade blogs, you will see the following acronyms: BTO, BTC, STO, and STC.   They are acronyms for transactions of stocks, bonds, and options.  And here are definitions.

BTO: Buy to Open
BTC: Buy to Close
STO: Sell to Open
STC: Sell to Close

So, when do you see them?  Here is an example.

I decided to buy (or long) 100 shares of Walmart Stock (WMT) at $72.00 per share (and I had a cash account of $10,000).  The transaction will show:

BTO WMT 100

Position
WMT   100  $7,200.00
Cash              $2,800.00

If I decided to sell that Walmart stock at $73.00 per share, it will show:

STC WMT 100

Position
Cash           $10,100.00

But when do you see STO or BTC?  You see them when you are shorting stocks.  Shorting means you are borrowing stocks to sell them.  Here is an example

I decided to sell (or short) 100 shares of Walmart Stock at $72.00 per share (and I had a cash account of $10,000).  I had to borrow WMT from my brokerage.  The transaction will show:

STO  WMT 100

Position
WMT  -100  ($7,200.00)
Cash              $17,200.00

If I decided to buy back to give the shares back to my brokerage at $71.00 per share, it will show:

BTC  WMT  100

Position
Cash             $10,100.00

What if the stock price went up and I had to buy the shares back at $73.00 per share?  My position will be:

Cash             $9,900.00