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WFA accepts various types of brokerage orders from clients. To better understand the choices that may be available to you when placing a trade, review the below definitions and associated risk factors.
Stocks
An investment giving you partial ownership in a company based on the number of shares you purchase.
Exchange Traded Funds (ETFs)
A basket of securities traded throughout the day — just like individual stocks — on a national stock exchange. You purchase shares of an overall fund rather than individual investments.
ETFs seek investment results that, before expenses, generally correspond to the price and yield of a basket of securities or closely match the performance of the underlying index. There is no assurance that the price and yield performance of the index can be fully matched.
Options
Options are considered a derivative because their value is based on an underlying investment’s price, which means an option’s value will fluctuate. There are two kinds of options — calls and puts.
A call buyer pays a premium for the right to purchase an underlying investment at a certain price (the “strike price”) until the contract expires. In exchange for the premium, a call seller assumes an obligation to sell the underlying investment at the strike price if the call buyer exercises their right to purchase.
A put buyer pays a premium for the right to sell an underlying investment at a strike price until the contract expires. In exchange for the premium, a put seller assumes an obligation to purchase the underlying investment at the strike price if the put buyer exercises their right to sell.
A seller keeps the buyer-paid premium regardless of whether the buyer chooses to exercise their right.
Options are a very complex investment strategy with many moving parts and are not appropriate for all investors. Options come with a number of risks you need to understand before you invest and are not available for all account types.
Mutual Funds
A fund allowing you to pool your money with other investors in a professionally managed portfolio. Mutual funds may offer diversification through stocks, bonds, and other investment types or a combination of each.
Returns and principal value of a mutual fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
Available for Trading—Cash
This figure is the maximum dollar value of securities that you can purchase using cash only.
It is calculated by adding the available cash in your brokerage account, your Bank Deposit Sweep, your Money Market Balance(s), and any linked bank deposit account balance(s). We then deduct any maintenance calls (Fed or House) related to your account.
Prior to clicking the Refresh button, this figure does not take into account any open orders that you may have. Click the Refresh button in order for your Cash Available for Trading balance to account for your open orders.
Available for Trading—Margin
This figure is the approximate dollar value of marginable securities that you can buy on margin without depositing additional equity.
It is calculated by adding the available cash in your brokerage account (including cash available for margin purchases multiplied by 2), your Bank Deposit Sweep, your Money Market Balance(s), and any linked bank deposit account balance(s). We then deduct any maintenance calls (Fed or House) applied to your account.
The "Available for Trading—Margin" figure shown on the Balances page does not take into account any open orders that you may have. Click the Refresh button to recalculate "Available for Trading—Margin" including your open Orders.
Please note that this "Available for Trading—Margin" figure is an estimate and applicable for online trading only.
Buy
An order to buy a security.
Sell
An order to sell a security.
Buy to Cover
An order to buy shares previously sold short. This "closes" a short sale.
Sell Short
An order to sell shares of stock that you do not own, done in expectation that the stock price will fall and you will be able to buy back the shares at a profit. If the stock price at the time you buy back the shares is above the price at which you sold, you will have a loss.
The below order types are currently offered by WFA:
Market Orders
Market orders are used to buy or sell securities promptly at the best available price.
Clients should understand that the last-traded price is not necessarily the price at which their order will be executed and that in fast-moving or illiquid markets, the price at which their order executes could be significantly away from the last-traded price or recent quotations in the security. Clients seeking to avoid execution at a price significantly away from the last-traded price should consider using a limit order, especially during periods of high market volatility or for securities with volatile trading prices.
Limit Orders
Limit orders are used to buy or sell securities at a specific price or better and can help protect clients from adverse price movements when entering orders to buy or sell a security.
Clients are strongly encouraged to consider using limit orders during periods of high market volatility or for securities with volatile trading prices. Limit orders to buy can only be executed at the limit price or lower, while limit orders to sell can only be executed at the limit price or higher. Limit orders are not guaranteed to execute and will not be executed if the security does not trade at the identified limit price of the order.
Stop Orders
A stop order to buy (or sell) becomes a market order to buy (or sell) when a transaction occurs at, or above (below), the client’s stop price and at, or within, the prevailing national best bid or offer (“NBBO”) quotation for the security.
Stop-Limit Orders
A stop-limit order combines the features of a stop order and a limit order. Stop-limit orders differ from stop orders in that once the stop price has been triggered, the order becomes a limit order, not a market order.
Stop-limit orders help protect clients from adverse price movements when entering orders to buy or sell a security, especially during periods of high market volatility, although, once triggered, the limit order will not be executed if the security does not trade at the identified limit price of the order or better.
WFA does not accept stop orders in all securities, including bulletin board and ‘pink sheet’ equities.
Additional risk considerations regarding stop orders are discussed below:
Day Order
An order to buy or sell a security during the regular market hours. A day order automatically expires at the end of the regular trading day if it is not executed or canceled.
Good-Til Order
An order to buy or sell a security, usually at a specified price, that remains in effect for a specific period of time, unless executed or canceled.
