You purchased some stock last month for $50 per share.Today the stock closed at $80 per share.You would like to protect the profit that you have made on this stock but you really don't want to sell it in case it continues to rise in price.What should you do?

Question

Quizplus · Accepted Answer

Placing a stop-loss order on the stock will set a predetermined price at which the stock will be automatically sold, protecting the profit made so far. If the stock continues to rise in price, the stop-loss order can be adjusted accordingly. Placing a market order may result in selling the stock at a lower price than intended, and there is no such thing as a "protect order."

You Purchased Some Stock Last Month for $50 Per Share