It's basically another term for a limit order when buying or selling securities. Example: You want to sell 1,000 shares of Colonel Electric (The General got demoted after it cut its dividends).
The shares have been trading wildly between $15 and $25 a share. You don’t want to feel like a moron for having sold them at $15, when six weeks later they kiss $25. With tongue.
So what do you do? You put in a LIMIT ORDER.
That is, you put a limit of a minimum price of $25/share (AT THAT LIMIT) for Colonel Electric, such that those shares will simply sit in your account, maybe forever…until somebody out in the wild blue yonder of Stockland is willing to pay AT LIMIT $25 or more for the shares where you have put a minimum price limit of $25/share in your order.
So here’s to hoping they sell, and don’t get further demoted. Sergeant Electric is just a place you don’t want to go.
Related or Semi-related Video
Finance: What is a Takedown?7 Views
finance a la shmoop what is a takedown well it's basically a commission or a [The definition of takedown]
spread that investment bankers um take down from the proceeds raised on a
securities offering ie an IPO well specifically that takers
down are called the syndicate and we wish we could tell you that with [People playing cards and smoking]
something mob-related but that's just a group of stock brokers who generally
sell to institutional accounts like mutual funds hedge funds and a big fat
family set of offices yeah like wealthy people's offices yeah at its essence the [Pile of cash]
take down is the gross profit that each syndicate member makes after the
placement of the securities after wire fees and other basic transactional costs
are covered such as the sellers of the securities get their dough whatever [The words 'illustrative example time' fall out of a piggy bank]
dot-com is selling 10 million shares of 20 bucks a pop the syndicate buys them
for 19 bucks each five minutes before placing them or selling them to the buy [Definition of the buy side]
side so there's a $1 spread in this placement and in most cases the lead
underwriter gets some percentage of the gross spread off the top to cover the [Calculation of the underwriter commission]
zillion dollars they spent on expensive lawyers and other bureaucrats being
certain that the securities offering complied with the you know 742 laws all ['The Big Book of 742 Laws' appears]
deriven from the 1933 and then 34 acts so if the lead banker gets a say a 15
percent override well then 85 cents net is left over for the takedown to be
distributed among the selling members of the syndicate and if any of those [Money being moved to the syndicate]
selling members feels they've been cheated well get ready to see one of [People stand up angrily in a board room]
these take down in this corner accountant wearing glasses 132 pounds so [Two men wearing boxing gloves ready to fight]
yeah pale-skinned alright sorry pal pick the right career [Guy is punched and knocked down]
Up Next
What is a limit order, and how can we be sure we never have one of those in place when we go to a doughnut shop?
What is the Historical Trading Range? The historical trading range is just the collection of prices a security has been trading at since its IPO in...
Trading volume is the number of shares trading back and forth at a given time.
The term "oversubscribed" typically refers to a hot IPO; it describes a security offering with an incredible or unexpected volume of investing acti...