medium · Market Microstructure lob
A trader places a 'stop-limit' order to sell 100 shares with a stop price of $50.00 and a limit price of $49.50.
If the stock price drops instantly from $50.05 to $49.00 in a 'flash crash,' what happens to the order?
- The trader ends up buying 100 shares instead of selling them.
- The order is triggered but remains unfilled as a limit order at $49.50.
- The order is automatically and instantly canceled by the exchange.
- The order executes immediately at the crash-low price of $49.00 per share.
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