Chapt 5 Flashcards
Orders
If trading is very active, certain transactions may not be reported. In leu of this…
tape will print the word “fast” to acknowledge that certain trades have been deleted
an order that’s to be executed at the best possible price when the order reaches the ring
market order
an order to buy at the limit price or lower or sell at the limit price or higher
limit order (resting order)
becomes a market order if the contract trades at or below the stop price
sell stop order
how does a stop order to sell commodity futures differ from a stop order to sell stock
the commodity futures order becomes a market order when there is a trade or offer at the stop price. a stop order for stock becomes a market order when there is only a trade
becomes a market order if the contract trades at or above the stop price
buy stop order
incorporates the provisions of both a stop order and limit order
stop limit order
becomes a market order when the commodity trades at, or is offered at or below, the limit price
buy MIT order
becomes a market order when the commodity trades at, or is bid at or above, the limit price
sell MIT order
used by a person who wants to establish a short position or liquidate a long position when the market rises to a certain level
what is the difference between the limit and MIT order?
the limit order must be bought or sold at the limit price or better
whereas the MIT order may be bought or sold at any price once a trade occurs at the price specified in the order
order placed to either sell at a limit price, buy at a higher price or sell at a lower price; in this case, discretion is given to a certain amount
discretionary order
how is discretion given?: discretionary order to buy
given above the limit
how is discretion given?: discretionary order to sell
given below the limit
an order that gives the floor broker full discretion regarding the handling of the order and how to take a position; the broker cannot be held responsible for his action or inaction
not held order
an order that’s to be executed as soon as the order is presented in the crowd and, if it cannot be executed at the limit price, it is canceled
fill-or-kill order (FOK)
is similar to fill-or-kill orders but may receive partial execution
fill-and-kill order (FAK)
an order where the customer is instructing the broker to execute one of two alternatives. the first chosen will cancel the other automatically
one cancels the other order (OCO)
an order that moves a contract from one delivery month to another delivery month or from one exchange to another exchange
switch order
**customers must pay a full round-turn commission because it’s considered to be a new order
ex. cx doesn’t want to accept delivery so he will offset in a more distant delivery month
an order that a floor broker or FCM executes on behalf of another floor broker or NFA member; often used to execute larger, block trades for CTAs or CPOs
give up order
an ex-pit transaction where two hedgers will prearrange to exchange their cash and futures positions; this also includes the transfer of a customer’s account between clearing member firms
exchange for physicals order (EFP)
