STOP orders of lightly traded options

If I hold an option that doesn’t have much volume but place a stop order to sell. Will C2 place the order once the BID gets to the STOP point or will it never be placed unless a trade occurs on that option at or below the STOP price.

The bid may trigger a stop. (Or the ask for a buy order.)


What exactly defines ‘may’ trigger. Is that may as in ‘will’ or may as in ‘might’. :wink:

I was hoping I could skirt by with that subtle use of the English tongue.

But okay, you called me on it. For options trades, the last trade price will definitely trigger a stop, but the bid/ask may trigger it. Although this happens to make the simulated fills created by the Hypothetical Fill Engine (HFE) very similar to real-life option trading (where no fills are guaranteed on a just-touched bid/ask), that isn’t due to my intent. It is an artifact of how the HFE works from a software perspective. (Hint: we don’t store a lot of bid/ask data in our database, but we do store a lot of last trade prices.)