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Contingency Order |
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Contingency order In the context of general equities, order to buy one security, if the trader can sell another, usually given that certain price limits or conditions reach a certain level. Swap, switch order. Contingent Order An order to a broker to conduct a transaction on the assumption that a related transaction is conducted. The related transaction may occur before, after, or at the same time as the contingent order. That is, an investor may give an order to his/her broker to buy Stock A contingent upon the sale of Stock B. A common example of a contingent order is a buy-write, in which an investor orders his/her broker to buy a security and at the same time write an option with that security as the underlying asset. Contingency order. A contingency order to buy or sell a security or other investment product is one that has strings attached. Specifically, it is an order, such as a stop order, a stop-limit order, or an all-or-none order, that is to be executed only if the condition or conditions that the order specifies are met. For example, if you gave a stop-limit order to sell a particular stock if the price fell to $30 -- the stop price -- but not to sell if the transaction price were less than $27 -- the limit price -- execution would be contingent on the stock price being between $27 and $30. Broker-dealers aren't required to accept contingency orders, but if they do accept them they are required to abide by the terms of the order. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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