The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “How does a limit order work for buying?” It doesn’t matter what you’re actually buying. Whether you’re buying stock or options, commodities, Forex, futures, bitcoin, it really doesn’t matter. A limit order simply limits the price in which you are willing to pay to enter that security or to buy that security. To use an options trading example, let’s say we want to buy a call option in Apple and we’re willing to pay $200 for that call option contract. We would enter a limit order that says we limit the price we are willing to pay to $200 or less. That means that if the price of the call option contract in Apple is more than $200, that order will not execute by the broker. The broker has a fiduciary responsibility not to execute that order, not to send that through at $201 or $202. It could only send it through if it is guaranteed to fill at $200 or less. Now, sometimes th