Limit-on-Open (LOO) Order
What Is a Limit-on-Open (LOO) Order?
A limit-on-open (LOO) order is a type of limit order to buy or sell shares at the market open if the market price meets the limit's condition. This type of order is great only for the market opening and doesn't last for the whole trading day.
A LOO order can measure up to a limit-on-close (LOC) order and contrasted with a market-on-open (MOO) order, which is a non-limit market order that is executed at or just after the opening of a stock exchange.
Grasping a Limit-on-Open (LOO) Order
LOO orders are one of several conditional orders accessible to investors. They are closely comparable to LOC orders since both are executed at the open or the close.
Investors and traders utilize conditional orders to indicate prices at which they will buy and sell. Limit orders give a way to investors to set specific investing boundaries and furthermore to oversee risk. Active traders can likewise utilize limit orders to make numerous wagers at different price points in an active trading strategy.
Limit-on-Open Order Execution
A LOO order is a conditional limit order that investors can utilize while seeking to wager on a security's price at the open of trading. A LOO order can be utilized to buy or sell a security. It is placed as a standard limit order, however it likewise has a predetermined condition for the timing of the order. As the name proposes, LOO orders are conditioned for execution only at the market's open.
LOO and LOC orders are unique in that they offer execution at a predetermined time during the trading day; the open or the close of trading. A LOO order permits an investor to place a bet on the next trading day's opening price. Generally LOO orders must be submitted prior to 09:28 a.m. Eastern time, two minutes before the market opens. In the event that a LOO order isn't executed at the market's open, it is canceled.
These orders are generally utilized by traders who accept that the market's open will offer the best timing and liquidity for their specific trade.
A LOO order may be executed in the event that the open price matches the limit order price or better. Partial orders might possibly be filled relying upon the brokerage and exchange order allowance.
Illustration of a Limit-on-Open Order
For instance, consider a trader who holds 1,000 shares in ABC stock and needs to sell at the market open yet in addition needs to guarantee that they will receive no less than $50 per share. The trader, consequently, utilizes a LOO order to sell the shares at a limit of $50.
If at open the shares trade at or above $50, the order will be executed. Conversely, on the off chance that they trade below $50, the order won't be filled and will be canceled.
Limit-on-Open (LOO) Order versus Limit-on-Close (LOC) Order
A LOC order works similarly however at the close of trading. An investor can place a LOC order with a predetermined price for execution at the market's close.
A trader putting in this type of request accepts that the market's close will offer the most good time and liquidity for their trade. Both a LOO and a LOC order permit the trader to control the specific timing of execution.
Features
- Traders might involve LOO orders to exploit increased liquidity in an issue right at the open.
- A limit-on-open (LOO) order is a limit order that will be executed specifically at the market open.
- Limit orders control the price that is paid for a security, or what price a security is sold at. The additional "on open" boundary means the order is only executed assuming the opening price is inside the price limit of the order.
