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What
is an All-or-None Stock Order?
If you are an investor who relies heavily
on penny stocks, the all-or-none order (AON) is extremely important.
The AON order works to safeguard your purchase by providing
the guarantee that you either receive every single stock that
you requested or none at all. This type of order can problematic
when a particular company lacks the cash to stand behind their
stocks or a limit has been placed on the order. All-or-none
orders are the lowest priority of your stockbroker therefore,
this type of transaction is executed last, so when your broker
finally attempts to execute this order, there must be enough
stocks available to buy or the order is null and void. Therefore,
your all-or-none order will not be filled until there is enough
stock available no matter how much time elapses before purchase
of an AON order is accomplished.
In order to better clarify this type of order, an
example is provided. Let's say that you put in an order to buy 2500
shares of stock from Wal-Mart, however, because Wal-Mart stocks
are in such high demand, only 1000 shares are available for
purchase. If you place an all-or-none order on the Wal-Mart
shares, then you must wait until 2500 shares are available
for purchase. Now, if it takes 10 months for 2500 shares of
stock from Wal-Mart to become available, then there is a high
chance that the price of each stock has increased. However,
because you placed an AON order 10 months ago, your broker
is currently executing the order, and the total number of stocks
are presently available, so you are required to purchase all
2500 of them no matter what the price per stock may be.
Obviously
the advantage to the all-or-none order is that the
price of any given company's stock could either stay the same
or even decrease in price. For example, you would like to obtain
3000 shares of stock in Applebee's, a restaurant chain; however,
because Applebee's stocks are in high demand, there are only
1000 stocks available for purchase. You really love this restaurant
chain and you had your heart set on 3000 shares of Applebee's,
so you decided to place an all-or-none order on the purchase
of these stocks. Currently the each share of stock is priced
at $200 each, so you would only presently be investing $600,000
if the stocks were available. So, now you play the “waiting”
game to see if other people who own stocks in Applebee's are
willing to sell them. Finally, after 2 years of waiting, your
stockbroker contacts you with the good news that all 3000 shares
of Applebee's stock are available. And, even better news, each
stock has dropped $50 in price. That means that instead of
investing $600,000 for 3000 shares of Applebee's stock, you
only have to invest $450,000! If you budget allows, that leaves
you with $150,000 to invest into another stock.
Now, there
are two huge disadvantages of all-or-none orders,
the first one being price inflation. For example, you would
like to purchase 4500 shares of stock from Southwestern Bell,
a phone company. So, again, you contact your broker with this
decision. You broker informs you that there are only 2500 shares
of stock available from Southwestern Bell, however, that it
would be wise to place an all-or-none order because these stocks
seem to steadily increase in profit and lower in price per
stock. So, you follow through with this. About 9 months later,
your stockbroker reports to you that all 4500 shares of stock
in Southwestern Bell are available; however, the price per
stock has increased 34%. Because you did not cancel this all-or-none
order, you are now forced to purchase all 4500 shares of Southwestern
Bell stock. The other disadvantage is that you may not receive
the all-or-none ordered stocks. Let's say that you wanted to
purchase 6000 shares of stock from Friedman's, a jewelry store,
however, not all the stock is currently available. So, you
place an all-or-none order. Three months later, your stockbroker
goes to complete the order; however, there are still not a
total of 6000 stocks available from Friedman's. Because your
stockbroker attempted to fill the order, you have lost all
of the stocks that you wanted to purchase.
Because this type of order is highly stressful, it is imperative
that you hire a broker in which you can thoroughly trust due
to the fact that one wrong move will make you lose everything! # # # # # SolveYourProblem.com : 2007
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