A limit order, by definition, is an order type that guarantees the price you entered or better. This rule applies to equities, equity options, futures, and options on futures. That means if you have a limit order to buy 100 shares of XYZ @ $50, then the order will be filled at $50 or lower and vice-versa when selling.
Limit Order Pros and Cons
There are advantages and disadvantages when using limit orders
Pros: You are guaranteed the price you entered or better IF the market reaches your order price. For example, if you route an order to buy 200 shares of XYZ @ $20, then your order can be filled at $20 or less if the market reaches your limit price. On the contrary, if you are selling 200 shares at $20, then your order can be filled at $20 or more.
Cons: Since you are specifying a price your order may not get filled because the market may never reach your limit price. Using the same example, if the market for XYZ is $23 bid by $24 ask and you are trying to buy 200 shares @ $20 (bid), then your order may fill since the ask price would need to drop to at least $20 to fill.
To learn more about market orders instead, click here.
To learn how to set a default order type (market or limit) for single-leg options orders or stock, please click here.