Limit orders are used to cap the price you are willing to sell or purchase a security. You can place a limit price for both buy and sell orders, as outlined below.
Buy Limit Orders
On a buy order, a limit specifies the most you are willing to pay for a security. For example, if XYZ option is trading at $1.50 per contract and the most you are willing to pay is $1.40 per contract, you can place a limit order at $1.40 and the trade will not take place (execute) until there is a seller willing to match your price.
Sell Limit Orders
On a sell order, a limit specifies the least you are willing to accept for the sale of a security. For example, if XYZ contract is trading at $2.50 and the least you are willing to accept is $2.75, you can set your sell limit at $2.75 and you will not sell your position until there is a buyer willing to pay that price or greater.
Comments
0 comments
Please sign in to leave a comment.