A day order is an order to buy or sell that cancels automatically at the end of the trading day (4 PM ET) if it hasn't filled yet.
How It Works
You place a limit buy order for a call option at $2.50 as a day order.
If the stock never falls to $2.50 by market close, your order automatically cancels.
Next trading day, you'd need to re-enter it.
Pros
- Clean Slate: Each day you reassess instead of old orders sitting around
- Prevents Mistakes: No old forgotten orders filling unexpectedly
- Default: Most orders are day orders by default
Cons
- Requires Action: If you want the order active next day, you must re-enter it
- Might Miss Fills: Good limit prices might not hit until next week
When to Use
- Intraday traders (obvious choice)
- Short-term options (weekly, daily)
- When you want your order to expire if not filled today
When NOT to Use
- Longer-term positions (use GTC instead)
- When you're willing to wait weeks for a fill
Best Practice
Use day orders for most options trades. If the price is reasonable today and doesn't fill, it's probably not worth chasing tomorrow.
Related: GTC Order, Limit Order, Order Types
