medium · Market Microstructure lob
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.
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