Order Types for Options
Understanding order types is essential to executing options trades effectively. Composer currently supports two primary order types for options: Limit Orders and Market Orders.
Limit Orders
A limit order allows you to set the maximum price you’re willing to pay (for a buy order) or the minimum price you’re willing to accept (for a sell order). The trade will only execute if the market reaches your specified price or better.
Buy Limit Order
You set a maximum price you’re willing to pay. If the market price falls to that level or lower, the order may be filled.
Sell Limit Order
You set a minimum price you’re willing to receive. If the market price rises to that level or higher, the order may be filled.
Limit orders help ensure you don’t pay more—or receive less—than your desired price. However, execution is not guaranteed. If the market does not reach your specified price, the order may remain unfilled. Unfilled limit orders will remain active until the end of the trading period, at which point they will be canceled.
Market Orders
A market order is intended to execute immediately at the next best available price. While this order type usually guarantees execution, it does not guarantee the price at which the order will be filled. Market orders do not guarantee execution.
Because options prices can change rapidly—especially during periods of high volatility—the execution price may be significantly higher or lower than expected.
If you have any questions or feedback, our team is available at help@composer.trade!
Disclaimer: Options trading involves significant risk and is not appropriate for all investors. Prior to buying or selling an option with Composer Securities LLC, please read the "Characteristics and Risks of Standardized Options," also known as the Options Disclosure Document (ODD). You can access the ODD by clicking here. Options transactions are often complex and can expose investors to potentially rapid and substantial losses. In some cases, you may lose your entire investment in a relatively short period. Furthermore, certain complex options strategies carry additional risk, including the potential for losses that may exceed your original investment amount.