Unit 16 placing a trade SIE
Bullish
1. feeling confident and positive about the future 2. (finance) causing, or connected with, an increase in the price of shares long stock
Bearish
1. like a bear; rough 2. tending to depress stock prices 3. expecting a fall in stock prices short stock
A buy stop order at 39 could fill at which of the following prices? 38 39 40 41
38 39 40 41 A buy stop order becomes a market order and fills at the next available price once it touches or passes through the stop price.
If your client, Marvin Blackwell, places a sell stop order at 38 when ABC is trading at 40, at which of the following prices could the order be filled? 38 39 40 41
38 39 40 41 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.
A client entering a sell limit order at 43 would accept which of these trades?
44 A sell limit at 43 means the investor will only accept a price of 43 or better (higher). Certainly, if the client is willing to sell at 43, she would be even happier to receive 44.
Your customer, Ellesha, places a sell stop at 50 on DEZ stock while it is trading at $53 per share. After the order is elected, Ellesha may sell her shares at which of the following prices? $48 $49 $50 $51
$48 $49 $50 $51 Once triggered (i.e., elected), this becomes a market order to sell. Market orders may sell at any price.
Caleb McCann got a tip from his brother Nate on XYZ stock two months ago. Caleb hasn't previously been investing in the stock market but has been watching this stock since he got the tip from his brother. Caleb is now very bullish on XYZ and wants to place a trade. Which of the following would you recommend?
Buy XYZ to open a long position Because McCann has no existing position, this would be an opening transaction, and if bullish on the stock it, would be a purchase.
Narcissus, Inc., a social media company, has shares selling at $52. Your customer likes the company but thinks it is currently a bit too high and would like to buy the stock if the price declines to $50 per share. Which of the following orders meets this customer's request?
Buy limit @ 50 This order instructs the broker to buy at a price of $50 or better. Entering a buy stop at 50 would trigger the order immediately, becoming a market order to buy at the current price. The stop limit would not trigger until the stock rose to 55, then it would be an order to buy at 50, so the stock would have to rise to at least 55 then drop to 50 or below. Owning the puts gives him the right to sell the stock at the strike of 50, not buy it.
Your client, Randall Stephens, has been bearish on LMN stock and sold it short several months ago. He now believes the company is in a good position for a turnaround and wants to change his strategy on LMN. What should he do to implement his new strategy?
Buy to close his existing position and open a new long position in the stock Buying to close will eliminate his existing position, but if he now wants to engage in a bullish strategy on LMN, he would need to buy additional shares.
Immediate or Cancel (IOC)
Execute any portion available immediately partial execution is unacceptable; only a portion of the order can be filled, the remaining unexecuted portion is canceled
If left unexecuted, a good til cancel (GTC) order will automatically be canceled when?
On the last business day of April and the last business day of October GTC orders are valid until executed or canceled. Any GTC orders left unexecuted are automatically canceled on the last business day of April and the last business day of October. If the customer wishes to have the order remain working beyond those specific days, the customer must reenter the order.
Your client, Jane Anderson, has owned QRS for a few years but has now turned bearish on QRS. What transaction would you recommend?
Sell QRS to close Because Anderson already owns the stock, this would be a closing transaction, and because she is bearish it would be a sell.
The market for Dizzy Rides Inc., is at $52 per share. Your customer would like to sell his shares for $55, and believes the stock will climb to that level in the next two to three weeks. What order should he place?
Sell limit 55 GTC Only the good-til-canceled (GTC) order will live past today. All the others will cancel if unexecuted by the end of the day. If there is no qualifier then it is a day order. Fill-or-dill (FOK) orders that cannot be filled immediately or cancelled. An all-or-none order would need to also be marked GTC to go into the next day.
Who must reconfirm a good 'til canceled order for it to stay in force more than six months?
The customer who placed the order Good 'til canceled orders historically have been canceled at the end of April and October. Some firms will cancel them more frequently, but for the order to stay in effect longer than six months, the customer would need to reinstate the order.
Which of the following best describes how a market order to buy would fill if placed when the market price of the stock was at 40?
The next available price Market order always gets the next available price, regardless of if it is a buy or sell and regardless of price.
Which of the following best describes how a sell stop at 39 order would be filled?
The next available price after the market price falls to 39 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 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.
John Christensen places a buy limit order at 42 when the market price of the stock is at 45. Which of the following best describes how the order would fill?
The order can only be filled at a price of 42 or lower Buy limit orders are placed below the current market price and fill at the stated price or lower
Your customer places an order to buy 500 shares of Narcissus, Inc., (the ticker is NCS) at $50 per share fill-or-kill (FOK). When the order is entered, there are 450 shares available at $50 per share. What happens to the order?
The order will be canceled and nothing is done. A fill-or-kill order (FOK) instructs that the order be filled in its entirety and immediately. As there are insufficient shares available to fill this order, it will be canceled and nothing is done.
An order that when triggered becomes a market order is called a
stop order. This is the basic purpose of a stop order.
buy limit order
the highest price at which an investor will purchase at a specific stock
A bearish sentiment means that a person believes
the security will decline in value. Bearish means one believes the security will decline in value.
stop order
trade is not to be executed unless stock hits a price limit
stop order
trade is not to be executed unless stock hits a price limit a stop order does not become live in the market place until the stock trades at or through a specified price; once the order is triggered by the stock reaching the specified price; the order becomes a market order
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 a sell limit order once triggered. The sell stop limit order becomes an order to sell at the market when triggered. The sell stop order becomes an order to sell at the market when triggered.
The sell stop order becomes a sell limit order once triggered & The sell stop order becomes an order to sell at the market when 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.
sell stop order
an order for a brokerage firm to sell a stock when the price falls to a specified level
An investor has her registered representative enter a sell stop limit order at 50. Following the order entry, trades occur at 52, 50, 49, 51, and 53. The investor would receive
51 This is really two orders. The first is to stop at 50. That is, once the stock trades at 50 or lower, the order is elected (triggered) and becomes a live working order. That order is to sell at 50 or better. Therefore, the first time the stock hits 50 (or less), is the trade at 50. That triggers the sell limit order to sell at 50 or better. The next trade is at 49 and that is not an acceptable price given the limit order set at 50. The following price, however, at 51, is the next acceptable price after the order is triggered and that is where the order would be executed.
How long can a good 'til canceled order remain in force without being reconfirmed by the customer?
6 months Good 'til canceled orders historically have been canceled at the end of April and October. Some firms will cancel them more frequently, but for the order to stay in effect longer than six months, the customer would need to reinstate or reconfirm the order.
Your client, Mary Quinn, wants to place an order to sell a stock in her portfolio when the current price is 45, but she is only willing to sell if she can sell for at least 47. Which order should she place?
A sell limit order Sell limit orders are placed above the current market price and fill at the stated price or higher. Market orders fill at the next available price. Sell stop and sell stop limit orders are not triggered until the market drops to or through the stop price.
stop limit order
A stop order that becomes a limit order after the specified stop price has been reached or passed
Stop limit order
A stop order that becomes a limit order after the specified stop price has been reached or passed buy or sell, this order type also has a stop price and does not become a live working order until the stock trades at or through the stock price
Good 'Til Cancelled (GTC)
When your order is valid until you cancel it; placing an order to buy 100 shares at $10 GTC means that is a standing order until you tell the system to kill it
Your customer is quite nervous about the stock market but expresses his belief that equities are still the place to save for retirement over the long term. He places a trade for 500 shares of an equity index fund. Overall your customer is likely
a bull. This customer has expressed confidence in stocks and has invested money to back up his belief. He is not confused at all. He recognizes that the equities can produce nerve-wracking consequences but have the best record of long-term growth, He is a bull.
A customer enters a market order. This type of order can be
a buy or sell order to be executed at the next available price. Market orders can be either directions to buy or sell and are executed at the next available price. Market orders have no limits regarding price paid (buy) or received (sell).
Limit order
a request to buy or sell a stock at a specified price
limit order
a request to buy or sell a stock at a specified price
market order
a request to buy or sell a stock at the current market value
All or none order
a trade request executed only if the broker has enough shares, as a block, to fill the order in a single transaction they do not have to be filled immediately, they can be held until the end of the day or beyond until they can be filled in their entirety
Day order
a trading order that expires at the end of the trading day during which it was made if the order has not been filled, it is canceled at the close of the day's trading
Fill-or-kill order
a trading order which if not filled immediately expires can't be partial execution
buy stop order
an order for a brokerage firm to buy a stock when the price rises to a specified level
Narcissus, Inc., a social media company, has shares selling at $50. Your customer is bearish. He would like to sell the stock short, but not until it retreats at least 10% from its current price. In order to catch the drop he could
enter a sell short at stop 45 The uncovered call does not help. If exercised he would have to buy the shares before he delivers them, leaving him flat (no position). The buy stop at 45 would trigger immediately and would become a market order to buy. As there is nothing that indicated he owns the shares now, the sell long would be rejected. The sell stop short at $45 would become a market order to sell the stock short when it trades at 45.
Market-at-open or market-on-close order
orders designated to be executed at the opening of the day or at the close of the day