order execution question

J

John9999

does anyone know if it is possible to set the following type of order thru a US broker..

lets say stock ABC is trading at $20/share for common stock... I want to set an order that says ,,, if ABC goes to $18, buy x number of $17 calls expiring Month/date.

and I would want to set the sell order to exit the calls the same way, based on the common shares achieving some price
 
You can do that with TOS. The identification of the CALL will be via the unique opra symbol, so you will need to modify your order, if you want it to continue for a different expiration (if the trigger takes longer than the existence of the initial CALL you may prefer.)
 
Robert Morse said:
Be very carefull with these orders. If the order gets triggered on the open, you might get a very bad execution.
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Yeah... you would need to have a pricing model for that call based on new stock price and possibly a different IV and execute on a limit order. Otherwise, if you buy at the market it's very possible you take the offer at the open right after a high vol event, which means wide spreads.
 
Robert Morse said:
Be very carefull with these orders. If the order gets triggered on the open, you might get a very bad execution.
More...



Listen to Robert, he know's what he's talking about, you will get some ugly fills unless your trading super-highly liquid stocks. How about buying a $17 stock with Bid $1.20 x $2.7 ask during a price collapse? Best to buy the Common if you can afford it, your expectancy of making a profit will go down badly. Listen to Robert, Please!
 
I am listening... my idea just sounds like trouble waiting to happen.... no big deal to set an alarm that says to notify me if XYZ trades at X Price.. there are tons of free services that accomplish that.
 
If you understand the tool, and what can happen to an order, you may be able to produce an order that will be satisfactory. Ie... with TOS, you can use the trigger condition you mentioned, then constrain your Option order to be a limit order offset from the MARK at the time the Trigger fires (cave in 5 cents off the mid, if you really want in -- and the option typically has a 15 cent bid/ask spread). -- Most of the time, this will be adequate. You may also include a alert to inform you the trigger condition has occurred, so if your limit order is NOT filled, you can alter your order if needed.
 
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