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Zorluk: Çok zorTypes of Orders and Order Execution Strategies

An investor submits two Good-Til-Canceled (GTC) orders for XYZ stock when it is trading at 38.0038.00 per share:
1. Order 1: A Sell Stop order at 35.0035.00.
2. Order 2: A Buy Stop Limit order with a stop price of 40.0040.00 and a limit price of 42.0042.00.

Following overnight market news, XYZ stock opens at 33.0033.00 per share. During the trading session, XYZ trades continuously up to 41.5041.50, reaches a high of 43.0043.00, and closes at 42.0042.00.

Which of the following statements regarding the activation and execution of these two orders during the trading day are correct?

  1. The Sell Stop order activates immediately at the market open (33.0033.00) and converts to a market order, executing at the prevailing market price of 33.0033.00.Cevap
  2. B
    The Sell Stop order guarantees an execution price of at least 35.0035.00 and remains unexecuted until the price recovers to 35.0035.00.
  3. The Buy Stop Limit order activates when XYZ trades at or above 40.0040.00, becoming a buy limit order that can execute at 41.5041.50.Cevap
  4. D
    The Buy Stop Limit order activates immediately at the market open because the opening price of 33.0033.00 is below the specified limit price of 42.0042.00.

Cevap

The correct statements are that the Sell Stop order activates immediately at the market open (33.0033.00) and executes as a market order at 33.0033.00, and the Buy Stop Limit order activates when XYZ trades at or above 40.0040.00, becoming a limit order to buy at 42.0042.00 or better, which allows execution at 41.5041.50.
The statement regarding the Sell Stop order is correct because opening at 33.0033.00 is below the 35.0035.00 stop price, activating the order into a market order that executes at 33.0033.00. The statement regarding the Buy Stop Limit order is correct because a buy stop at 40.0040.00 triggers when the stock reaches 40.0040.00, becoming a limit order to buy at 42.0042.00 or better, which successfully fills at 41.5041.50.

Adım Adım Çözüm

1
Analyze Order 1 (Sell Stop 35.0035.00) execution dynamics upon market open at 33.0033.00.
The activation condition for a Sell Stop is a trade or quote at or below 35.0035.00. The opening trade at 33.0033.00 satisfies this condition, immediately triggering the order into a Market Sell order.
Once triggered, a stop order becomes a market order and executes at the next available market price (33.0033.00). It does not guarantee the stop price of 35.0035.00.
2
Analyze Order 2 (Buy Stop 40.0040.00 Limit 42.0042.00) activation condition upon market open at 33.0033.00.
The activation condition for a Buy Stop is a trade at or above 40.0040.00. The market opening at 33.0033.00 is below 40.0040.00, so the order remains inactive at market open.
A buy stop order protects against rising prices and does not activate when prices are below the stop price.
3
Evaluate Order 2 execution as XYZ trades up through 40.0040.00 to 41.5041.50.
When XYZ trades above 40.0040.00, the Buy Stop triggers and converts into a Buy Limit order at 42.0042.00. When XYZ trades at 41.5041.50, the order executes because 41.5041.50 is at or below the limit price of 42.0042.00.
A buy limit order specifies the maximum price an investor is willing to pay. Any execution price equal to or less than the limit price (42.0042.00) fulfills the order.

Anahtar Kavram

Order activation rules and execution mechanics for Stop orders versus Stop-Limit orders under market gap conditions.
Tahmini Süre:2m 0s
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Konular

Types of Orders and Order Execution Strategies