For example, in order to buy calls only if the stock reached a certain price, enter an order to buy the calls if the stock or index reached the stop price. If XYZ is currently trading at 40 and you wanted to buy the January 50 Calls but only if the stock breaks out to 48, enter a Buy Stop order to buy the calls that would be sent to the market if XYZ trades at 48. In addition to Stop orders, the PreferredTrade system allows you to place another type of order that is also conditional on a stock or index price reaching a certain level. These orders are called Contingent Orders. Please note that an option contract price will not trigger a contingent order.
Contingent orders are the opposite of Stops.
Contingent Sells are placed above the current market and Contingent Buys are placed below the current market. Contingent orders are enabled to either open or close an option position when a stock or index reaches a desired level. The price of the option is difficult to project at the higher stock price. The feature works best for those who are willing to enter market orders. The system does allow a limit order to be entered.