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Combo order

A single order containing several option legs, or options plus stock, executed as one package at a net price.

A combo is entered as one instruction with a net debit or credit rather than separate orders. The exchange fills all legs or none, which removes the possibility of ending up with half a position.

Stock-plus-option combos matter for buy-write and delta-hedging: entering stock and option together locks the effective basis instead of leaving the hedge exposed while you chase the second fill.

Example: a buy-write on XYZ at $50 selling the $52.50 call at $1.10. Entered as a combo at a net debit of $48.90, you either get stock at an effective $48.90 or nothing. Entered separately, the stock might fill at $50.15 while the call decays to $1.00, turning a planned $48.90 basis into $49.15.

Related: complex-order-book, spread-order, legging

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Payoff of a long call at expiryA flat loss equal to the premium below the strike, turning upward at 45 degrees above it.Profit / loss per share08595115125Strike 105Max loss 3 — the premium paidBreakeven 108Profit keeps growingUnderlying price at expiry
Buying a call: payoff at expiry. A 105-strike call bought for 3 loses that whole 3 if the price finishes at or below 105, breaks even at 108, then gains a dollar for every dollar higher. The loss is capped at the premium; the upside is not capped.

Educational only, not advice. Spotted an error? Post in Site Feedback.