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Phil wrote:
> I would like some comments on how to give orders for futures and
> options to a broker from the situations below!
Zaitzeff replied to jdfo:
>
> jdfo: <"entry objective price and you want to go long, e.g. "buy one corn at
> 265 limit or better";>
>
> Until the contract units change my order would be, “Buy 5,000 bushels of corn
> at 265.” I believe, this in itself is a limit order. The “or better” here is
> confusing to me, since the market is supposed to get me the best fill. I know
> there is a subtle difference when it should be used, probably when the market
> is lower than your buy order and you want to let the broker know that you
> already know that, but I forgotten the distinction.
price is at 265 and you want to pay no more than 263: Buy 1 contract
May wasp-nests at 263 or lower ("or lower" is optional, but it helps
confirm your meaning and alert the broker if you said sell by mistake)
price is at 265 and you definately want in but don't want to pay more
than 267: Buy one contract of May waspnests at 267 or better. (if you
don't use or better, you may get questioned or a call back for
verificaton).
price is at 265 and you only what to get in if it goes to or over 267
and you're willing to take any price after that moment: Buy one ctrct
May waspnests at 267 stop.
price is at 265 and you only want to get in if it goes over 267 but
don't want to pay more than 270: Buy 1 at 267 stop 270 limit. (not all
places will take this order).
If you trade endofday, use yesterday's close for the "price is at" part.
Best bet is to discuss with your broker how he/she expects the orders to
be phrased if you have any questions.
Stops may or may not work well in options depending on the market. I
used them for a while because I could not follow the market closely.
But options that are far out of the money or in the money may only trade
a few times per day. So your stop won't be activated. Or there may be
excessive slippage, or at least it will seem so, relative to the price
of the option. Or they may not take stops at all. It's a shame they
don't have a "sell 1 270 call if futures goes below 265" order for
options.
Stops and market orders in the e-mini/s+p are weird. Not sure, but I
believe some brokers enter the orders thru Globex and others route them
thru TOPS, and the exact effect may be different! Check it out before
you use them.
Conrad Bowers
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