Day-Around Order

  

Categories: Trading

Ever place an order with a friend going to the donut shop for a coffee and a raspberry jelly donut, but to get an apple jelly donut if the shop has run out of raspberry? Last thing you want is the coffee without the donut.

A Day-Around Order is a similar kind of securities order. It gives a contingency in order to get an execution done, since orders have to be followed explicitly by law, and a previous order must be cancelled before a new order replaces it. If, say you wished to buy 100 shares of a stock with a limit order of $5, but news comes out before the open, and that stock opens at $5.50 and starts to climb, you could put a Day-Around-Order that adds a $5.65 limit for the 100 shares. This allows for the cancelation for compliance purposes, and the execution to be completed so you still get your shares.

A market order could work to get you executed, but then you would automatically get filled if the stock opened perhaps at $6, which might be higher than your acceptable entry point.

Related or Semi-related Video

Finance: What is an All or None Order?71 Views

00:00

finance a la shmoop what is an all-or-none order oh you'd think that

00:08

spoiled brats only live on playgrounds of participation trophy cities hmm but [Boys holding participation trophies]

00:14

that is oh so sadly not true they roam the wild hallways of Wall Street

00:19

investment firms in droves and all-or-none order means that a buyer or

00:24

seller of stock either wants all of their shares bought or sold or none of

00:29

them and yes this applies to bonds preferred stocks and other random [Man discussing stocks and bonds]

00:33

hybrids as well.....A buyer has a portfolio of 500 million dollars in small cap

00:42

growth stocks generally speaking she's told her clients that she won't take

00:46

less than a 2% position in anything because she wants to be able to focus on

00:50

a core group of stocks and really be on top of any big movements hoping to sell [Stocks in a sack land on a table]

00:55

the shares before well, any huge problems holding so in this case she's

00:59

found a company she loves an appropriately named coal company for [Woman looking through binoculars in her car]

01:04

spoiled investors called mine mine mine the only problem is that the stock is

01:09

thinly traded that is not a ton of shares trade every day and she needs to

01:13

own either ten million dollars worth of stock which would be a two percent

01:17

position or she doesn't want to own any the stock at the moment is trading at

01:21

ten dollars and seven cents a share and she wants it at ten bucks or better...

01:25

well at ten dollars and one penny she has no interest whatsoever in that stock [Stock graph for mine mine mine company]

01:30

at 10.00 she's a buyer so that is her limit order but on this all-or-none

01:36

order she waits and waits and waits knowing that sometimes all-or-none [Woman looking at laptop waiting for the stocks]

01:41

orders simply never get filled other times they get filled scarily too fast

01:46

like the seller knew something the buyer did not but along comes a bad market day

01:50

the White House says something stupid what are the odds? and the market tanks for

01:54

an hour and blam she is the proud new owner of a million shares of mine mine

01:59

mine good for her those shares are now all hers hers hers [Pigeon poops on mans head]

Up Next

Finance: What is Good 'Til Canceled (GTC)?
2 Views

What is Good ‘Til Cancelled (GTC)? GTC orders are trade orders that may be filled at any time unless the investor cancels it. Good til cancelled...

Finance: What is a market order?
3 Views

A market order is a type of buy or sell order, but wouldn't it be more appetizing if it was fresh fruit, or smoked salmon, or any other delicious t...

Finance: What is an Unsolicited Order?
3 Views

An unsolicited order is an order to buy or sell a security demanded by the client.

Find other enlightening terms in Shmoop Finance Genius Bar(f)