Mark just placed a stop limit order to sell 100 shares at $21 stop, $18 limit. Which one of the following statements is correct concerning this order if the current market price is $16?
A)As soon as the price rises to $18, the stock will be sold.
B)The stock will sell for at least $18 but less than $21.
C)The stock will sell for $18 a share as soon as the price hits $21.
D)The order will become a limit order to sell at $21 once the market price reaches $18.
E)The order will become a limit order to sell at $18 once the market price reaches $21.

Question

Quizplus · Accepted Answer

A stop limit order becomes active as a limit order once the stop price is reached. In this case, when the market price hits $21, the order becomes a limit order to sell at $18, meaning the shares will be sold at $18 or better as long as the market price is at or above $18 after reaching the $21 trigger.

Mark Just Placed a Stop Limit Order to Sell 100