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. Investing

    Why China Is Suspending Market Circuit Breakers

    Chinese regulators have announced that beginning on January 8th, circuit breakers used to halt its stock markets will be suspended in order to "smooth" trading operations.
  2. Trading

    Understanding order execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  3. Personal Finance

    How brokers can avoid a market-maker's tricks

    Ensure that you and your clients are getting the best deal by avoiding these three pitfalls.
  4. 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.
  5. Trading

    High-Frequency Trading: A Primer

    An in depth look at how high-frequency trading works and who the players are.
  6. Trading

    Electronic Trading Tutorial

    Learn about the systems that run the market.
  7. Tech

    Why Betterment Delayed Trading Post-Brexit Vote

    A look at Betterment and its controversial decision to temporarily halt trading the morning after the historic Brexit vote.
  8. Trading

    Why limit orders may cost more than market orders

    Learn the difference between a market order and a limit order, and why a trader placing a limit order sometimes pays higher fees than a trader placing a market order.
Trading Center