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Does stock split effect stop limit?

 
 
chai2
 
Reply Wed 3 Jun, 2009 07:12 pm
Let's say you have a stock selling for $84.50, and you have a stop limit of $80 on it.

In a few days, a 3 for 2 stock split is going to occur, bringing the price per share lower than $80.

Will the stop limit automatically adjust itself, or would I have to manually go in and change it?

I don't want to sell the stock yet.

I'm going to contact the brokerage in the AM to ask, but I thought someone here might have the answer.
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Type: Question • Score: 1 • Views: 2,909 • Replies: 7
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chai2
 
  1  
Reply Thu 4 Jun, 2009 07:27 am
FYI - they said when a stock splits, the stop automatically cancels, so stock won't be sold.

You have to go back in and set a separate stop order afterwards.
roger
 
  1  
Reply Sat 6 Jun, 2009 04:10 pm
@chai2,
Good. That's what common sense suggests, but common sense doesn't necessarily apply.
0 Replies
 
talk72000
 
  1  
Reply Sun 7 Jun, 2009 11:14 pm
@chai2,
I am not a stock broker but a stock split means to me that more people want to buy shares but don't want to pay higher prices. The company must be doing well to split stocks. If you keep your stocks you will get more in terms of dividends. If you sell your stocks you will get more as you have more shares to sell. Either way you win.
chai2
 
  1  
Reply Sun 7 Jun, 2009 11:28 pm
@talk72000,
I don't care about the dividends, except to reinvest.

no, it doesn't mean I'd get more as I have more shares to sell. Only if the price of those split shares rise.

there is debate on whether stock splits are good, or indifferent.

I think it will cause some short term fluctuations in the price, as the market adjusts itself.
0 Replies
 
engineer
 
  1  
Reply Mon 8 Jun, 2009 06:39 am
@talk72000,
Once upon a time, the belief was that stocks priced in the $10-$40/share range had the best combination of consumer confidence and liquidity. Below $5/share and people wondered what was wrong with the company. Above $70-80/share and it was hard to buy in even blocks. The too low argument is still somewhat valid since some funds refuse to buy stocks that trade below $5/share. The high end limit is less so since there is no longer a penalty for buying uneven blocks of stock. Obviously Warren Buffet has never worried about high priced shares.
chai2
 
  1  
Reply Mon 8 Jun, 2009 07:15 am
@engineer,
engineer wrote:

Once upon a time, the belief was that stocks priced in the $10-$40/share range had the best combination of consumer confidence and liquidity. Below $5/share and people wondered what was wrong with the company. Above $70-80/share and it was hard to buy in even blocks. The too low argument is still somewhat valid since some funds refuse to buy stocks that trade below $5/share. The high end limit is less so since there is no longer a penalty for buying uneven blocks of stock. Obviously Warren Buffet has never worried about high priced shares.


Have you ever looked at the stock symbol BIDU?

The company has good fundamentals, but who could afford to buy stock that goes for between $200 and $300 a share?

What's the average person going to do? Buy 4 or 5 shares?

sheesh.
engineer
 
  1  
Reply Mon 8 Jun, 2009 08:04 am
@chai2,
It certainly doesn't have a strong emotional appeal to buy 4 shares of a company, but you could. E-trade et al will charge you the same commision on 4x800 as they would on 40x80 or 400x8. Still, I agree with you that they should split that, even if the impact is only mental.
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