Question

You purchased XYZ stock at 100 USD per share. The stock is currently trading at 120 USD, you can protect your gains by a_____

Select one:

a. Market order

b. Stop buy order

c. Limit-sell order

d. Limit-buy order

Answer 1

The current gain in appreciation of stock price can be protected by selling the stock at a price not less than the current rate. This can be accomplished by a Limit - sell order. As per Limit sell order, the stock will be sold only when the price reaches the specified one.

Answer is choice (c )

Regarding other choices which are not correct:

Market order executes buy or sell at the prevailing market rate. A particular rate is not ensured

The other 2 are buy orders, not suitable for protecting gain on the existing holdings.