How to Use a Step to Limit Order (Options)
A Step to Limit order can be used with any single or multi-legged option order. The Step to Limit order automatically modifies the order from a selected starting value in the spread toward the Natural. Select the starting value and the time span over which the order will be modified and the program does the rest. The idea behind this order is to attempt to get a more favorable fill than the Natural price.
1. Click the Opt (options) button at the bottom of the price pane to open the Option Strategies menu
The example used here is buying a long call. However, any of the strategies in the list can accommodate a Step Limit order.
This places the On-Chart Order Ticket at the left of the chart with the fields pre-filled based on the user-defined default option buy ticket.
Click the order type drop down arrow.
Select Step to Limit from the drop down menu.
Set the beginning of the slider at the limit price (premium) desired for the initial order. This will be the limit price at which the order will be entered.
Optional: Set an end point for the order modification. If you do not want to modify all the way to the natural, click and drag the Step To line to a preferred price at which the order will no longer be modified.
Over the predetermined time period the limit price will be automatically modified up from the initial entry price toward the Natural price. The step limit order will attempt to secure a preferable fill price in this process. Modification stops if no preferable fill is received and the limit price reaches the Natural.
Note: The disadvantage of stepping toward the natural (and/or market price) is that if the market moves against you while stepping, you could get a worse price than if you had just bought at the market initially.
The trading tools work on either a LIVE brokerage account or a PAPER (simulated) trading account. Live market trading requires an account with TC2000 Brokerage (www.TC2000Brokerage.com).