Stops on Options Orders

Options Trading Topic: No Stops on the SOX?(Semiconductor Index)

Dear Options Trading FAQ:

My broker wouldn't accept my stop order on the SOX. Says the specialist firm stopped taking them. Can this be true? No stops on these options?

Can't Stop Trading Options Now

Dear Options Stop Dropped:

Yes, as of last Thursday, Nov 16, the SOX specialist firm of Susquehanna Investment Group stopped dealing with stop orders on options. They applied for, and received, the ok from the officials at the Philadelphia exchange to cancel all existing option order stops and to refuse future stop orders until further notice.

Traditionally, stop orders on options are refused by the specialist in times of great volatility. In this case, it seems that recent price action by heavy-weights in the index such as Micron (MU), Texas Instruments (TXN), LSI Logic (LSI), and Applied Materials (AMAT) has caused the Semiconductor Index to swing wildly. It becomes just too risky for the specialist to try to fill the stops on his book.

Option floor sources say that such short term halts of accepting stops is not that uncommon, but is usually in effect for just a day or two. In this case, the feeling on the floor seems to indicate that this may become a lengthy affair.

It would be interesting to speak to the Susquehanna folks to see what the official party line is and when they expect to bring the stops back.

Oh, well. I guess you'll just have to stay glued to your own quote monitor all day long and watch for those options trades.

Good luck and trade well! Remember, an educated options trader is the best options trader. Browse these books books on trading options.

Tags: Options Trading, Options Broker, Options Order

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