medium · Market Microstructure lob
A trader places a stop-limit order to sell with a stop price of $48.00 and a limit price of$47.50. The stock is trading at49.00 and then suddenly gaps down to 47.20 on a news event.
What happens to the trader's order?
- The order is triggered and becomes a resting limit order at 47.50 that remains unfilled.
- The order is executed at 47.50 because of the limit price guarantee.
- The order is executed immediately at 47.20.
- The order is cancelled automatically because the stop was gapped.
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