Let's say I place a limit buy order at $9 one evening...

S

Saltynuts

Stock is at $9.30. I place a limit buy for the next day at $9, trying to add a bit to my position in case prices dip.

But the stock is actually going ex-dividend the next day, and the dividend is a big one, $1 per share. So they automatically drop the starting share trading price by $1 per share, to $8.30 per share.

Does my limit order automatically get adjusted to $8 per share, i.e. it properly takes into account the $1 dividend and hence $1 stock price reduction? Or does it ignore this, so I literally have a $9 limit order out there, ready to be taken advantage of, that can fill anywhere from $9 to $8.30 since the stock opens at $8.30?

Thanks!!!
 
It depends on your broker and/or which exchange the order is on. NYSE and NASDAQ dropped support for native GTC orders a few years back. IB generally cancels their simulated GTC orders when there is a corporate action.
 
cruisecontrol said:
It depends on your broker and/or which exchange the order is on. NYSE and NASDAQ dropped support for native GTC orders a few years back. IB generally cancels their simulated GTC orders when there is a corporate action.
More...

Thanks a ton cruisecontrol. Several posts in this thread so far, but yours is the only non-troll this far in. I appreciate it. When you say NYSE/NAS dropped support for native GTC orders, what if mine is just a day order (what I normally do)? I.E. I place the order one evening and it is a next day only.

And IB long ago stopped GTC orders, now they are good for 90 day orders max.

But I don't think any of that has relevance on my question?

Thanks!!!
 
Saltynuts said:
Stock is at $9.30. I place a limit buy for the next day at $9, trying to add a bit to my position in case prices dip.

But the stock is actually going ex-dividend the next day, and the dividend is a big one, $1 per share. So they automatically drop the starting share trading price by $1 per share, to $8.30 per share.

Does my limit order automatically get adjusted to $8 per share, i.e. it properly takes into account the $1 dividend and hence $1 stock price reduction? Or does it ignore this, so I literally have a $9 limit order out there, ready to be taken advantage of, that can fill anywhere from $9 to $8.30 since the stock opens at $8.30?

Thanks!!!
More...

Your order could be filled at $8.30 if you are lucky but in most cases will be filled at $9.00. A limit buy order means it can only be filled at the limit price or less. So if the price is at $8.30 and there happens to be large enough of an order that wants to sell at whatever price that's available and your order size happens to fit within the desired sell-order size then you will get filled at $8.30. In other cases, you will get filled at $9.00 but never worse. But under no circumstances that your sell limit order price will be adjusted to $8 per share without authorization from you cuz that's against client service agreement.
 
JSOP said:
Your order could be filled at $8.30 if you are lucky but in most cases will be filled at $9.00. A limit buy order means it can only be filled at the limit price or less. So if the price is at $8.30 and there happens to be large enough of an order that wants to sell at whatever price that's available and your order size happens to fit within the desired sell-order size then you will get filled at $8.30. In other cases, you will get filled at $9.00 but never worse. But under no circumstances that your sell limit order price will be adjusted to $8 per share without authorization from you cuz that's against client service agreement.
More...


Thanks so much JSOP. That sucks. I wonder if there is some limit order type that automatically adjusts for the underlying going ex-dividend. Because in reality 99% of the people that place a limit order would want that I would guess. Setback. :(

Thanks!!!
 
Saltynuts said:
Thanks so much JSOP. That sucks. I wonder if there is some limit order type that automatically adjusts for the underlying going ex-dividend. Because in reality 99% of the people that place a limit order would want that I would guess. Setback. :(

Thanks!!!
More...

IB offers another order type called REL which allows you to place orders with price pegged to the NBBO at the time. Check it out. It might help you with what you are trying to do in this case. https://www.interactivebrokers.com/en/index.php?f=4985
 
Thanks JSOP! That looks interesting, but that seems to be an order to try and work to buy/sell your position basically at current prices, but more aggressively, trying to get a better price.

I'm literally wanting a limit type order where I can, in the evening, look at the close, and place a buy "limit" order a good bit below the close to pick up a little of the stock if it dips the next day and hits my buy price. But I don't want to have to worry to see if the next day it is going ex-dividend so might leave me in a lurch. So just a "limit order adjusted for ex-dividend amounts" would be perfect, but I guess such a thing does not exist. :(
 
Saltynuts said:
Thanks a ton cruisecontrol. Several posts in this thread so far, but yours is the only non-troll this far in. I appreciate it. When you say NYSE/NAS dropped support for native GTC orders, what if mine is just a day order (what I normally do)? I.E. I place the order one evening and it is a next day only.

And IB long ago stopped GTC orders, now they are good for 90 day orders max.

But I don't think any of that has relevance on my question?

Thanks!!!
More...

Day orders can't be placed on an exchange the day before, native GTC orders are the only ones that can live on an exchange across days. If your broker allows placing a "day" order while the market is closed, what they are actually doing is storing the order in their own system and routing it to the exchange the next day. In this case, what happens with splits and dividends is entirely up to your particular broker.

JSOP said:
Your order could be filled at $8.30 if you are lucky but in most cases will be filled at $9.00. A limit buy order means it can only be filled at the limit price or less. So if the price is at $8.30 and there happens to be large enough of an order that wants to sell at whatever price that's available and your order size happens to fit within the desired sell-order size then you will get filled at $8.30. In other cases, you will get filled at $9.00 but never worse. But under no circumstances that your sell limit order price will be adjusted to $8 per share without authorization from you cuz that's against client service agreement.
More...

This is blatantly false, modifying limit prices for dividends is standard practice advised by FINRA:
https://www.finra.org/rules-guidance/rulebooks/finra-rules/5330
And IB does something a bit different. Obviously brokers have a bit of flexibility here.
 
Saltynuts said:
Thanks JSOP! That looks interesting, but that seems to be an order to try and work to buy/sell your position basically at current prices, but more aggressively, trying to get a better price.

I'm literally wanting a limit type order where I can, in the evening, look at the close, and place a buy "limit" order a good bit below the close to pick up a little of the stock if it dips the next day and hits my buy price. But I don't want to have to worry to see if the next day it is going ex-dividend so might leave me in a lurch. So just a "limit order adjusted for ex-dividend amounts" would be perfect, but I guess such a thing does not exist. :(
More...
JSOP is incorrect. What you want does exist, it just depends on your broker. Ask them how they handle this scenario.
 
Thanks cruisecontrol!

And wholly CRAP, I googled the subject matter, and apparently, a few years ago, another smart motherfuker asked this exact same question, on this exact same forum! This proves great minds really do think alike! Couple geniouses in the house lolol!!!


https://www.elitetrader.com/et/thre...-that-takes-into-account-ex-dividends.339430/


It appears you are right cruisecontrol, some brokers at least, and IB (my broker), might do it the right way. I'll call them to confirm.

Thanks so much to all for the help!!!
 
You must log in or register to reply here.
Back
Top