A client owns shares of ABC Corp currently trading at $50. To help limit potential losses, the client gives their registered representative an order to sell if the stock price falls to $45. Which type of order is MOST appropriate for this scenario?

Why B — Sell stop order at $45

A sell stop order at $45 triggers a market sell order if the price falls to or below $45, helping to limit losses on a long position. (A) is incorrect; a sell limit order would only execute if the stock could be sold at $45 or higher, which may not protect the client from a drop below $45. (C) is for purchasing shares, not selling. (D) does not provide price protection, as it executes immediately at the current price.