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Expanded limits

A widened daily price limit that takes effect the session after a market settles at limit, letting price find its level.

Exchanges do not want markets locked forever, so most agricultural contracts expand limits automatically — typically by 50% or more — the day after a limit settlement, and continue expanding until normal trading resumes.

Traders holding through a lock-limit move must plan for this: the expanded session is where the gap actually gets priced, often violently and with poor liquidity at the open.

Example: corn's 25-cent limit expands to about 38 cents after a limit close. A short who survived day one faces a possible 38-cent ($1,900 per contract) move on day two.

Related: lock-limit, limit-up-limit-down, variation-margin, gap

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