When Beverly liquidates her short position of 20 ABC March 50 puts, how will her order be classified?

When Beverly liquidates her short position of 20 ABC March 50 puts, her order is classified as a closing purchase. This classification is based on the nature of the transaction she is executing.

In this scenario, Beverly initially sold (or wrote) the 20 puts, creating a short position. To close this position, she must buy the same options back in the market. This process of buying back the options is considered a "closing purchase" because it serves to close out her previously established open short position.

In contrast, if she were to create a new position in the options market by selling puts she did not already own, that would be classified as an opening sale. Similarly, if she were to buy puts to initiate a new long position, it would be termed an opening purchase. Therefore, understanding the difference between opening and closing transactions is crucial in option trading, particularly when managing existing positions.