limit and stop orders in case of split and dividends

[gmst]

Have not traded stocks, so a basic question. How are limit and stop orders handled in case of split or large dividends (say 20%)?

 

[gmst]

one more: I know that before you can shortsell a stock, you have to find it somewhere (borrow it from somewhere).

Once you have an established short position, is it possible that you will forced to buy back the stock because lender can call it at any time? Or once you borrow the stock, you can keep it for a minimum period (1 week, 1 month??). Thanks very much.

 

[blah12345678]

Quote from gmst:

Have not traded stocks, so a basic question. How are limit and stop orders handled in case of split or large dividends (say 20%)?

Large dividends for a public company? Are you trading railroad stocks from the 1870s?

I would think it'd be safer to manually adjust any open orders. I imagine your broker would just cancel the order, as it might be a liability issue for the broker to modify your open orders w/o your knowledge or consent.

Probably better to cancel and reenter so you don't get mistakenly stopped out.

 

[blah12345678]

Quote from gmst:

one more: I know that before you can shortsell a stock, you have to find it somewhere (borrow it from somewhere).

You don't have to find anything. Your broker will tell you whether the stock shortable and whether shares are available.

Once you have an established short position, is it possible that you will forced to buy back the stock because lender can call it at any time? Or once you borrow the stock, you can keep it for a minimum period (1 week, 1 month??). Thanks very much. [/B]

Yes and no. Otherwise, that magical event called a "short squeeze" would never occur if the borrower could keep the shares for as long as they want...

 

[ej420]

the exhchange (e.g. NYSE) adjusts the order by the dividend amount on the ex-date, unless there is an explicit flag asking it not to. you can find out more by googling.

 

[gmst]

Quote from ej420:

the exhchange (e.g. NYSE) adjusts the order by the dividend amount on the ex-date, unless there is an explicit flag asking it not to. you can find out more by googling.

Thank You Thank You.
is it true only for NYSE or is it true for NASDAQ and others like BATS, ARCA etc. also?

 

[gmst]

Quote from blah12345678:

Large dividends for a public company? Are you trading railroad stocks from the 1870s?

I would think it'd be safer to manually adjust any open orders. I imagine your broker would just cancel the order, as it might be a liability issue for the broker to modify your open orders w/o your knowledge or consent.

Probably better to cancel and reenter so you don't get mistakenly stopped out.

That made me chuckle Railroad stocks from 1870s

Thanks for answering my questions both this one and the shorting one.