What is a One-Cancel-All Order
A one-cancel-all order is a bundle of at least three stock or option limit orders placed together. If one of these orders is executed, the remainder get canceled.
BREAKING DOWN One-Cancel-All Order
The OCA is a package of limit orders placed on stocks or equity option contracts. If one of the trades contained within the OCA is triggered, that order is executed and the other orders are immediately canceled. If the triggered order can only be partially filled, the others are left open but adjusted according the to the proportion of the partially executed trade. If an investor cancels one of the orders, the remainder will automatically be withdrawn as well. The orders can all be placed on the same underlying stock or an separate issues. Option contracts can be part of a bundled OCA as well. Time in force directions such as good ‘til canceled (GTC) may be applied to OCA orders.
An OCA order can be of use to an investor with a limited budget to devote to any one position but the willingness to consider several possible stocks for the purchase. This trade can also suit an investor willing to consider multiple routes to a single investment. For instance, a trader looking to own a particular stock may bundle a standard limit purchase order for the stock with one or more options contracts that could give them other rights to purchase the stock at a favorable price.
OCA orders are sometimes referred to as either-or or alternative trades. They can also be confused with one-cancels-other (OCO) orders which involve only two orders. These are all complicated orders and some brokerage firms or online trading platforms do not offer them to clients. Those that do typically charge special fees.
One-Cancel-All Order or Bracketed Order
A third rationale for an OCA order sometimes referred to as a bracketed order is designed to ensure profit in the case of a stock’s escalating price and safeguard against downside loss. In this alternative order, an investor places a market buy order for shares of company X and brackets that order with two sell orders. First is a sell limit order at a strike price higher than the original market purchase price. The second additional component is a stop loss order set at an acceptable margin below the market purchase price. The structure of this OCA guarantees the investor a minimum loss from downside movement and a guaranteed gain if the prices climbs to an acceptable level.