medium · Market Microstructure
A trader holds a long position in a volatile stock and places a 'Stop-Limit' sell order (Stop 45.00, Limit44.50).
If the stock 'gaps' down and opens at $44.25 after a negative news event, what is the immediate status of the order?
- The order remains dormant because the $45.00 stop price was never 'touched' during regular hours.
- The stop is triggered, and a limit sell order at $44.50 is placed, which remains unexecuted because the market is below the limit.
- The order is canceled automatically because the opening price was 'out of bounds'.
- The order is executed immediately at the opening price of $44.25.
Sign up free to see the explanation and track your rank →
More Market Microstructure practice
- A stock is quoted at $50.00 bid x $50.10 ask. A buyer submit… — How does this action affec
- A stock is trading at $100.00. The Level 1 S&P 500 Market-Wi… — What is the status of trad
- If the stock price drops instantly from $50.05 to $49.00 in a 'flash crash,' what happens
- Under the National Market System (Reg NMS), if Exchange A is quoting a stock at $10.00 x
- If the stock gaps down and opens at $69.50 on Tuesday morning, at what price will the trad
- If the dealer uses a quote shading parameter of κ = 0.00004 to manage inventory, what is t
- A trader places a large sell order for 50,000 shares at $50.01 only to cancel it immediate
- Using the Lee-Ready algorithm, how should a trade occurring at $50.10 following a $50.00 t