Conditional Orders
Conditional orders allow the user to attach one or more stipulations that must be true before the order can be submitted. This might allow an investor to only buy/sell an option if its underlying is trading above or below a specified level. Alternatively, the condition might cause the order to become active only when an index is trading above or below a specific range. The Conditional order type may draw together multiple stipulations that might make it harder for the trade to execute, yet which would safeguard the investor from trading outside of circumstances under which he would prefer not to trade. The trader can choose from and combine logical conditions from Price, Time and Volume variables using operators of equal to, greater or less than. Other conditions include Margin Cushion, Trade and Percentage Change. Clients could enter an order to buy 10 call options on MSFT with a specified limit price of 85-cents, but only when its share price ≤ $46.45 and Volume >25mm and the S&P 500 index was ≤ 2,000.
For Good-til-Canceled (GTC) conditional orders, unless the order is executed on the same day as the condition trigger, the condition has to be retriggered again on the following day(s) for the order to become active.
Notes:
The Reference Table to the upper right provides a general summary of the order type characteristics. The checked features are applicable in some combination, but do not necessarily work in conjunction with all other checked features. For example, if Options and Stocks, US and Non-US, and Smart and Directed are all checked, it does not follow that all US and Non-US Smart and direct-routed stocks support the order type. It may be the case that only Smart-routed US Stocks, direct-routed Non-US stocks and Smart-routed US Options are supported.
| Products | Availability | Routing | TWS | ||||
|---|---|---|---|---|---|---|---|
| Futures | US Products | Smart | Attribute | ||||
| FOPs | Non-US Products | Directed | Order Type | ||||
| Forex | Time in Force | ||||||
| Options | Order Ticket | ||||||
| Stocks | |||||||
| Warrants | |||||||
| View Supported Exchanges|Open Users' Guide | |||||||
Example
Order Type In Depth - Conditional Buy Order
Step 1 – Create a Limit Buy Order
The JAN11 490 XYZ call is currently trading at $30.20 - 31.00. You want to buy 1 contract, but only if the Ask price of the underlying stock falls to 464.00 per share. You enter a Limit Buy order for 1 contract, then right-click the order line and select Modify > Condition from the menu.
| Assumptions | |
|---|---|
| Action | BUY |
| Qty | 1 |
| Order Type | LMT |
| Market Price | 30.20 - 31.00 |
| Limit Price | 30.95 |
Step 2 – Add Condition to the Order
On the Conditional tab in the Order Ticket, you add a new condition by clicking the Add button and following the steps shown above. You want to buy 1 contract if the price of the underlying stock falls to 464.00 per share so you select Price as the condition, then enter the underlying symbol, trigger method, operator and trigger price.
In this example, we are using the Default trigger method, which for US options is the double bid/ask method, where two consecutive ask price (bid price) values must be less than (greater than) or equal to the trigger price, and the second bid or ask must have greater size if it is at the same price level as the first bid or ask.
You click Transmit to submit the order.
Step 3 – Place Conditional Order for 1 XYZ Option Contract
You've transmitted your Conditional order. When the price of the underlying stock falls to 464.00 per share, your Limit order to buy 1 option contract will be submitted.
Step 4 – Market Price of Underlying Falls, Condition Satisfied
The market price of the underlying XYZ stock falls to 464.00, which is the trigger price for the condition. The condition having been satisfied, a Limit order for 1 XYZ option contract is submitted with a Limit price of 30.95.
| Assumptions | |
|---|---|
| Action | BUY |
| Qty | 1 |
| Order Type | LMT |
| Market Price | 30.20 - 31.00 |
| Limit Price | 30.95 |
| Conditional Settings | |
| Condition | Price |
| Underlying | XYZ |
| Method | Default |
| Operator | <= |
| Price | 464.00 |
Step 5 – Market Price of Option Contract Falls, Limit Order Filled
The market price of the underlying XYZ stock falls to 464.00, which is the trigger price for the condition. The condition having been satisfied, a Limit order for 1 XYZ option contract is submitted with a Limit price of 30.95.
| Assumptions | |
|---|---|
| Action | BUY |
| Qty | 1 |
| Order Type | LMT |
| Market Price | 30.95 |
| Limit Price | 30.95 |