Contingency Order


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

BREAKING DOWN '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.

  1. Plain Vanilla

    The most basic or standard version of a financial instrument, ...
  2. Stop-Loss Order

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

    An order placed with a brokerage to buy or sell a set number ...
  4. Day Order

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

    An investor's instructions to a broker or brokerage firm to purchase ...
  6. Market Order

    An order that an investor makes through a broker or brokerage ...
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  1. What's the difference between a stop and a limit order?

    Different types of orders allow you to be more specific about how you'd like your broker to fulfill your trades. When you ... Read Full Answer >>
  2. How do hedge funds use equity options?

    With the growth in the size and number of hedge funds over the past decade, the interest in how these funds go about generating ... Read Full Answer >>
  3. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  4. How do I place an order to buy or sell shares?

    It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of ... Read Full Answer >>
  5. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
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    In trading with a foreign exchange, a trader can set a strike price for a currency pair by entering a limit order or a stop ... Read Full Answer >>

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