SIE practice questioneasyOrder Types
A buy stop order is typically used to:
- ALimit a loss on a short position✓ Correct answer
- BBuy below the current price
- CSell above the current price
- DLimit a loss on a long position
Explanation
Why A — Limit a loss on a short position
A buy stop order is used to protect against losses on a short position by buying back if prices rise. The other options describe different order types or incorrect uses.
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