Adams owns 100 Shares of Brikley stock, which is trading at 86$ per share, and Brown is short 200 shares of Brikley. Adams wants to buy 100 shares if the price rises to 90$, and Brown wants to cover his short position and take profits if price falls to 75$. The orders that Adams and Brown should enter to accomplish their stated objectives are: Adams Brown A. Limit buy @90 Limit buy @75 B. Limit buy @90 Stop buy @75 C. Stop buy @90 Limit buy @75 D. Stop buy @90 Stop buy @75 I can’t figure out the solution.
C Stop buy orders are placed above current market prices. Limit buy is placed at or below the market price.
Two for C!
Buy Stop Order — Investors typically use a stop order when buying stock to limit a loss or protect a profit on short sales. The order is entered at a stop price that is always above the current market price. Sell Stop Order — A sell stop order helps investors to avoid further losses or to protect a profit that exists if a stock price continues to drop. A stop order to sell is always placed below the current market price. To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. Thanx a lot. I got this concepts wrong from the begining, but now you made them clear and after a quick search the concepts are in my head forever:). Alex.