Unit 16: Placing a Trade
A buy stop order @ 39 could fill at which of the following prices?
A buy stop order becomes a market order and fills at the next available price once it touches or passes through the stop price. 38,39,40,41
Bull
A person who believes that the market will go up in value.
Sell stop order
A sell stop order is an instruction to sell at the market when a trade occurs at or below the stop price. If ABC stock's price drifted down and trades at 38, the stop is triggered. Even if it leaps over 38 to 37.95, for example, the stop would trigger. Remember that a stop, when triggered, becomes a market order. Market orders may fill at any price.
Example of stop "order"
AAL trading at 20. Order: Buy 2,000 shares AAL at 12 stop. As soon as AAL hits 12, this order becomes a live working market order, and it will be executed immediately at the next available price.
AAL buy 2,000 shares at 12 stop limit 13.
As soon as it hits 12, the order becomes a live working limit order. It will only be executed if the stock can be purchased for $12 or LESS.
Market order
Buy or sell, it is executed immediately at the best available market price.
Stop "order" (a trigger price)
Buy or sell; stock has to hit that specific price. once order is "triggered" the order becomes a market order. Then it will be executed immediately at the best available market price.
Limit order (limit buy, limit sell)
Buy or sell; the limit price is the MAX amount u want to drop on a stock. Or the MINIMUM selling price if selling.
Stop limit order
Buy or sell; this order also doesn't work until it hits that stop price. The order only becomes a limit order to buy/sell at the specified limit.
All or none (AON)
Don't have to be filled immediately. But it must be filled entirely or not at all. Can be held until the end of the day (day order) or GTC orders until they can be filled entirely.
Immediate or cancel (IOC) order
IOC orders are like FOK except that a partial order is allowed. The remaining order that isn't filled will be canceled
Bear
If a person believes that a given market/stock will go down instead of up.
For a buy limit order,
It means limit price or LOWER. Ex. Limit buy CCL for $15 or LOWER.
Limit sell order
Means at the limit price or HIGHER. so, SELL MGM @ $25 or HIGHER
Day order
Only valid until the close of trading on the day it is entered. If the order is not filled, it is canceled at the close of the trading day. If the order is partially filled, then any unexecuted portion is canceled.
Your client, Alice Tate, with no other positions in her margin account, is bearish on ABC stock. Which of the following transactions would you recommend?
Sell ABC to open Because there are no other positions, this would be an opening transaction and selling the stock would be bearish.
Which of the following best describes how a sell stop at 39 order would be filled?
Sell stop orders are placed below the current market price and become market orders once the price touches or passes through the stop price.
Which of the following best describes how a buy stop @ 39 would fill?
The next available price after the market price rises to 39 A buy stop order becomes a market order and fills at the next available price once it touches or passes through the stop price.
Which of the following best describes how a buy stop at 39 would fill?
The next available price after the market price rises to 39 A buy stop order becomes a market order and fills at the next available price once it touches or passes through the stop price.
Distinguishing between a sell stop order and a sell stop limit order, which of the following are true?
The sell stop limit order becomes a sell limit once triggered. The sell stop order becomes an order to sell at the market triggered. Stop orders become market orders once triggered, and stop limit orders become orders to sell at the specified limit once triggered. Stop or stop limit orders can be either buys or sells.
Market at open or market on close order
These are market orders designated to be executed at the opening of the day or at the close of the day. Depending on the market (exchange/OTC), the customer is not guaranteed the exact opening/closing price but instead a price at, or close to, the first/last price of the day.
Example of buy market order: Buy 1,000 shares MGM at MKT.
This order will be executed immediately to buy at the best available market price.
Ex of sell market order: Sell 1,000 shares CCL at MKT.
This order will be executed immediately to sell at the best available market price.
Sell limit order ex: Sell 1,000 shares of AAL at 32.
This order will be executed to sell 32 or better.
Buy limit order: Buy 1,000 shares AAL at 12
This order will only be executed at 12 or better.
Fill or kill (FOK) order
To fill the entire order immediately or kill it completely. With a FOK order, there CAN'T be a partial execution.
Good-till-canceled order
Valid until executed or canceled. All of GTC orders are automatically canceled if unexecuted on the last business day of April and last business day of Oct. If the customer wishes the order to remain after those days, they can request the order to continue for the next cycle.
If a person holds a short stock with a long call as a hedge
the person is bearish. Why? The short stock position represents more money.
