A short sale of stock made with pre-specified conditions, depending on how the stock trades afterwards.
Eric is worried about the future of a publicly traded retro-bicycle manufacturer, Backpedal Co. (Ticker: BKUP), but not too worried. He wants to short the stock, but lacks conviction. He’s the kind of guy who likes to have his cake and eat it, too.
Luckily, Eric can place a bracketed sell order, whereby he shorts 100 shares of the stock, but simultaneously authorizes purchase of 100 shares if the stock trades up more than 2%. That way, Eric gets all the exhilaration of day trading...and all of the transaction fees.
Related or Semi-related Video
Finance: What are Limit Order, Sell Limi...7 Views
Finance a la shmoop what is a limit order? you want to sell a thousand shares
of Colonel electric it was demoted after they cut their dividend the shares have [Scissors cuts dividend in half]
been trading wildly between $15 and $25 a share you don't want to feel like a
moron for having sold them at fifteen bucks when six weeks later they kissed
25 with tongue so what do you do well you put in a limit order that is you put
a limit of a minimum price of 25 bucks a share for Colonel Electric such that [Pile of stocks appear]
those shares will simply sit in your account unsold maybe forever until
somebody out in the wild blue yonder of Stockland is willing to pay twenty five [Woman standing at a colonel electric stand]
dollars or more for the shares where you have a minimum price limit of 25 bucks a
share in your order so here's to hoping they sell and don't get further demoted [Man carries stock into car]
Sargent Electric is just a place you don't want to go
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