Type of order: advice for newby

Discussion in 'Trading Software' started by alosito, Jun 23, 2005.

  1. alosito


    I am a newby, and my question is probably stupid, but here it is. What type of order should I place tonight if tomorrow I want to sell GOUSN (GOOG july 270 put) at $5.00? Its today closing price was $2.70. So if tonight I place a regular LIMIT order and GOUSN opens, for example, at $6, which price will I get? $5 or $6? Basically, what I am trying to figure out is how I can place an order to sell an option and:

    1. Not get a price lower than the opening price
    2. Not have the order canceled and have it valid until the end of the trading day if my desired price is greater than the opening price.

    I use TWS to trade options. If you think IB is not the best place to do what I am trying to do, please let me know.
  2. Try a sell limit order at 5.00 for the option. You'll have to enter just before the session tomorrow or, if entered this evening, mark it GTC and cancel it later. IB clears their orders at some point overnight - anything not marked GTC gets cancelled.

    As for $5 or $6, the limit order is for $5 or better. If the option opens at $6 you'll likely get close to that price, but it's not a guarantee.

    Good luck.
  3. Htrader

    Htrader Guest

    Never place option orders when the market is closed.

    The option market does not have a regulated open, which means that not all the market marker quotes come online right at 9:30. Instead they trickle in one by one, especially for a volatile stock like goog. So if you have a low limit sell order in, IB will send that order right at 9:30 and you will most likely get a bad execution on it, depending on which exchange it ends up at.

    Its much better to send that order when the market is open and you can see a firm bid. If you can't be at your computer, you are still better off calling IB and manually placing the order via the phone.
  4. Choad


    I don't know if it is a good trade or not, but you do know that you will be obligated to buy GOOG at $270 if your short put is assigned.

    Even if it gets slammed down to $135 on some hidden horror story? Swallowing a $5K-$10K loss or whatever will take the shine right out of that 500 bucks you got!

    Unless, of course, you already own the put and you are just selling to close?

    Good luck to all.

  5. alosito


    Is there any trading software that I can use at night to place orders but that would actually place them on the market let's say 15 minutes after the market opens the next morning? Something that in my example would follow these conditions:

    1. If at 9:45 AM the price is over $5, sell at the current market price.

    2. If at 9:45 AM the price is below $5, place a limit order to sell at the $5.