Buying and closing position refers to the option position established before the option buyer buys the same number of the same type of option contracts with opposite directions in the trading market before or on the expiration date of the option. In this way, Simon Lu can control the risk and lock in the income, because if the option contract bought by the option buyer in the previous transaction realizes the value, he can buy the closing lock-in income before the option expiration date, instead of waiting until the option expiration date.
Selling liquidation refers to the option seller selling the same number of the same type of option contracts with opposite directions in the trading market before or on the expiration date of the option, so as to close the option position sold before. This can control the risk and lock in the income, because if the option contract sold by the option seller in the previous transaction realizes the value, he can sell the closed position and lock in the income before the option expiration date, and can pretend to be early without waiting for the option expiration date.
It should be noted that the option liquidation can be carried out at any time, without waiting until the option expiration date. In addition, the option liquidation needs to pay a certain handling fee and transaction cost.