medium · Market Microstructure lob
A trader places a Stop-Limit order to sell at $70.00 Stop, $69.50 Limit. The stock is currently $72.00.
If bad news breaks and the stock gapped down to open at $69.20, what happens to the order?
- The stop is triggered, and a limit order to sell at $69.50 is placed but remains unfilled.
- The order is automatically cancelled by the exchange because the opening gap was deemed too large.
- The order executes at the $70.00 stop price itself due to built-in price protection rules on the exchange.
- The order is executed immediately at the $69.20 opening print, filling the full order size.
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