Contingency Order

AAA

DEFINITION of 'Contingency Order'

An order that is executed only when certain conditions of the security being traded, or another security, have been fulfilled. Such prerequisite conditions range in scope and depth. In a simple case, a contingency order may depend on the potential purchaser's ability to sell a different security in his or her portfolio to free the funds to make the purchase. In a more complicated situation, an options contingency order's execution may depend on the share price of the options' underlying stock

INVESTOPEDIA EXPLAINS 'Contingency Order'

A stop-loss order can be viewed as a contingency order because it does not become a market order until the price of the stock being sold reaches a predetermined price. This type of order is very useful when applied to the sale or purchase of options.

RELATED TERMS
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches ...
  2. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  3. Not-Held Order

    A market or limit order that gives the broker or floor trader ...
  4. Plain Vanilla

    The most basic or standard version of a financial instrument, ...
  5. Day Order

    An order to buy or sell a security that automatically expires ...
  6. Market Order

    An order that an investor makes through a broker or brokerage ...
Related Articles
  1. Understanding Order Execution
    Investing Basics

    Understanding Order Execution

  2. The Stop-Loss Order - Make Sure You ...
    Active Trading Fundamentals

    The Stop-Loss Order - Make Sure You ...

  3. What's the difference between a stop ...
    Active Trading Fundamentals

    What's the difference between a stop ...

  4. The Top Technical Indicators For Options ...
    Options & Futures

    The Top Technical Indicators For Options ...

comments powered by Disqus
Hot Definitions
  1. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  2. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  3. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  4. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  5. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
  6. Direct Participation Program - DPP

    A business venture designed to let investors participate directly in the cash flow and tax benefits of the underlying investment. ...
Trading Center