Limit Order Case Study

Recently, I had a client ask me for some help regarding one of his stock positions.  If you own a stock position and you would like to sell out at a certain price, this strategy might be right for you.  Please read on.

My client recently retired and wanted to sell some of the shares in a stock position that was “over-concentrated.”  He wanted to sell a specific number of shares if the stock reached a certain “high” price. 

I suggested we use a “limit order.”  A limit order is used to buy or sell a security at a pre-determined price and will not execute unless the security’s price meets those qualifications.

We put the limit order in with an agreed upon sale price and an expiration date of year end (12/29/2023).  A few weeks later, the order was filled when that stock hit the “limit price”.  As a result, my client was able to liquidate the specific number of shares before the end of the year. 

This strategy will also free up some non-qualified funds for him for his retirement spending next year. 

The use of this type of tool gave my client piece of mind that he was able to sell his stock at a favorable price, without having to check the stock price daily.

Limit orders do have some inherent risks and should not be employed without first understanding them fully.

If you’d like to discuss your portfolio, your plan for retirement or a plan to generate income in retirement, contact me today to schedule a chat.

This material is for general information purposes only and should not be considered a recommendation to buy or sell any security, or of a specific investment strategy.  Please consult a financial advisor regarding your specific situation prior to implementing an investment plan.

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