A sudden influx of orders as a result of news can result in fast market conditions in the option markets. If two floor officials agree that the conditions are such that the integrity of the market is compromised as a result of the fast market conditions, the floor officials can:

  • Institute a trading rotation
  • Assign trading of options to another board broker
  • Allow board broker clerks to execute orders
  • Temporarily suspend the firm quote rule and Automatic executions
  • Take other actions that may be required

If the integrity of the markets cannot be restored after taking these actions, trading may be halted in the options if two floor officials agree. Trading can be halted by the floor officials for up to two business days if the underlying stock is halted, has a delayed opening, or if other unusual circumstances exist. Only the board of directors at the CBOE can suspend the trading of options if the trading in the option has been halted for two days or if the underlying security has been suspended on its principal exchange or other unusual circumstances exist. The exchange during unusual market conditions may also suspend the use of stop and limit orders to help restore the market’s integrity.

Need Help Passing Your Series 4 Exam?

Order Execution

Related Articles
  1. Trading

    The Death Of The Trading Floor

    Electronic trading has almost completely replaced face-to-face human trading.
  2. Financial Advisor

    Social Security: How to File and Suspend Online Before 4/29

    If you’re between the ages of 62 and 70, you could add up to $60,000 to your Social Security benefits if you file for and suspend them by April 29.
  3. Trading

    SEC-Regulated Options Brokers

    Investopedia provides a List Of SEC-Regulated Options Brokers
  4. Trading

    Getting Started In Forex Options

    Stocks are not the only securities underlying options. Learn how to use FOREX options for profit and hedging.
  5. Investing

    Why Options Trading Is Not for the Faint of Heart

    Trading options is not easy and should only be done under the guidance of a professional.
  6. Trading

    Options Hazards That Can Bruise Your Portfolio

    Learn the top three risks and how they can affect you on either side of an options trade.
  7. Trading

    Introduction to SPOT Options

    Single-payment options trading (SPOT) allows investors to have full control over their investments.
  8. Trading

    Is your forex broker a scam?

    While the forex market is slowly becoming more regulated, there are many unscrupulous brokers who should not be in business.
Frequently Asked Questions
  1. How do you calculate a company's equity?

    Company equity, or shareholders' equity, is the net difference between a company's total assets and total liabilities.
  2. How Can I Access a Company's Earnings Report?

    Find out how to access the quarterly and annual earnings reports for publicly traded companies, and how to listen in to company ...
  3. What Can Cause a Negative Terminal Growth Rate?

    Learn about the assumptions built into terminal valuations and in what circumstances the applied terminal growth rate might ...
  4. What Is the Effect of Price Inelasticity on Demand?

    Find out how price inelasticity of demand shows the relationship between demand and price when the price of an inelastic ...
Trading Center