Stop loss orders?

[Landdownunder]

Disclaimer I have NOT traded futures in current market.

Hypothetically guys that shorted or sold the wheat market would be facing massive margin calls.

If a stop loss was in place say 50 cents above market with rapid moves would have these stop losses actually be triggered or do they get next best price just wondering out loud.

[TechAnalyst]

A stop loss order becomes a market order once the price trades at the stop level. The fill on the order is not necessarily that price.

If you had sold May Chicago wheat at $11/bu with a buy stop at $11.50, the market only traded at $12.09 Friday, locked at limit up.

Your stop order would have become a buy at the market order once the price traded over $11.50.

If you were lucky, you would have been one of the buy orders filled at limit up Friday.

If not, the order would still be working to try to buy at another $.85 limit move higher overnight at $12.94. If it trades off of that today your buy stop at $11.50 would be filled at $12.94. If not, you would expect higher yet.

This is extremely rare for a market the size of Chicago wheat but...

Hope that is clearer than mud.

[Old Cowzilla]

For that to happen that would mean nobody in Chicago bought wheat that day ?

[burnt]

Wow.

What came very clear to me is that buying options suddenly just got a lot more attractive in this market.

[TechAnalyst]

For that to happen that would mean nobody in Chicago bought wheat that day ?

There was trading taking place on Friday at limit up but the pool of bids at limit up was very significant. At one point there was over 200,000 bids to buy at limit up. It got as low as 5,000 bid orders so there was some that got fills but not everyone.

[farmboy44]

Disclaimer I have NOT traded futures in current market.

Hypothetically guys that shorted or sold the wheat market would be facing massive margin calls.

If a stop loss was in place say 50 cents above market with rapid moves would have these stop losses actually be triggered or do they get next best price just wondering out loud.

No. There still needs to be a buyer at the price the stop loss is entered for it to sell.

[TechAnalyst]

Wow.

What came very clear to me is that buying options suddenly just got a lot more attractive in this market.

Yes, that's why everyone is sick of me promoting buying options for price insurance to limit risk. The net price may not be as attractive as a futures hedge or a deferred delivery contract but this is just ugly.

And it just turned up the stress levels regarding '22 forward contracts on production, that crop better be there.

Buybacks will be a nightmare if not.

[TOM4CWB]

Yes, that's why everyone is sick of me promoting buying options for price insurance to limit risk. The net price may not be as attractive as a futures hedge or a deferred delivery contract but this is just ugly.

And it just turned up the stress levels regarding '22 forward contracts on production, that crop better be there.

Buybacks will be a nightmare if not.

Chicago Wheat is the one wheat market locked up 85 cents today, limits expanded to $1.35 tomorrow if it does not trade during the day session today.

Both Kansas [Hard Red Winter] and Minneapolis [Spring Wheat] wheats are trading on all months now... Minneapolis Spring Wheat hasn't seen the multi day limit moves of Kansas and Chicago wheats.