At tastytrade we offer stop-limit orders on multi-leg option spreads across all our technology. As of right now, we do not offer stop-market orders on multi-leg option spreads. Stop-limit orders function similarly to stop-market orders, but with an added stipulation on the execution price. When a stop-limit order is placed, it contains two specified prices: the stop price, which activates the order, and the limit price. Unlike a stop-market order that immediately becomes a market order to sell when the stop is triggered, a stop-limit order turns into a limit order when the stop price is triggered. Then the limit order will work and only executes at the limit price or better. These types of orders are typically used when an investor wants to lock in profits or set protection on their downside.

It's important to note that the execution of a stop-limit order is not guaranteed, especially if the price of the security is rapidly rising or falling. In the event your resting order's limit price is close to the market and there is a large gap up or down in price, the limit order may not fill. Widening the gap between your stop price and limit price will reduce the likeliness of this happening.

Available Order Types

Stop-Limit on spreads
Day
GTD
GTC

Unavailable Order Types

Stop on Spread
Stop-Market on spreads
Options orders do not fill in the pre or post-market session (EXT)
Futures options orders (stops not available for single or multi)

What triggers a stop-limit order on an options spread?

Stop-limit orders on options spreads trigger based on the implied bid or ask, also known as the implied NBBO (National Best Bid and Offer), not the mid-price. The implied NBBO is an aggregate of all single leg NBBOs as calculated by our routing partner whom is willing to take on this order type. Our platform displays the straight NBBO for the spread, however it does not display the Implied NBBO that is internally calculated by our order aggregators. Thus, in some instances the implied NBBO which determines the trigger could differ from the straight NBBO which you see on the platform. The best way to determine whether or not the trigger has been hit is to reference the NAT price as seen in the order ticket below.

Nat price in order ticket

Where do I place the stop and limit price?

Long spreads: place stop price at or below market, and closing sale price at or below market

Short spreads: place stop price at or above market, and closing purchase/debit price at or above market

An order may be rejected if you are placing a stop-limit order through the stop price. If you are long a debit spread trying to place a stop limit order, you will not be able to enter the stop price at the bid or higher. On the other hand, if you are short a spread and placing a stop-limit order, you will not be able to enter the stop price at the ask or lower.

Example

Since sells trigger off the bid price and buys trigger off the ask price, if you are long the spread and the bid is $0.12, and the ask is $0.14 you can set the stop price at $0.11 or lower. If the stop price is entered at $0.12 or higher, it will be rejected as this is already through the trigger price. Conversely, if you were short the spread, you would not be able to set the stop price at $0.14 or lower.

Setting up a Stop Limit Order on Spreads

Customers have the ability to place Stop Limit Orders on Multi-Leg Option Spreads on the desktop platform. Simply populate the options spread you want to place a trade on and then switch the order type in the bottom right of the order ticket to 'Stop Limit'.

Placing a Stop Limit Order on Spreads: Desktop Platform

Stop Limit Order Preview Screen

Placing a stop limit order through the stop price

If a user is long a debit spread trying to place a stop limit order, they will not be able to enter the stop price at the bid or higher. On the other hand, if a user is short a spread placing a stop order, they will not be able to enter the stop price at the ask or lower.