What is closing offset (CO) order?

A closing offset (CO) order is a limit order that is executed at market close but can be placed anytime during the trading day. The day’s closing price will always be the trade CO price.

Read on for a thorough explanation of what closing offset (CO) order means.

As mentioned earlier, closing offset orders are executed at market close  therefore they are used to offset any remaining open auction imbalances that exist at the end of the market day.

The closing offset order was first made available by the New York Stock Exchange (NYSE)  in 2009. 

Closing offset orders can only be limit orders. A limit order can be placed by a trader to buy a security at a specified price. Buy limit orders are executed at the limit price or lower, while sell limit orders are executed at limit price or higher. Therefore, limit orders give traders added control over trading execution prices. In the case of a closing offset order, the order will execute according to the security’s closing price on the given day.

According to the NYSE, closing offset orders can be placed or cancelled until 15:50 during a trading day, after which only orders with ‘legitimate errors’ can be cancelled. After 15:58, no cancellation of closing offset orders can be made.

Closing offset (CO) order explained

Let’s say a trader wants to buy 100 Tesla shares and they wish to pay no more than $1,000 per share. They can place a closing offset order for 100 Tesla shares at a limit price of $1,000 at any time before 15:50 on a given day. 

If Tesla shares close at $1,010 on that day, the trader’s order will not be executed since the closing price of the stock is not better than the specified limit price. However, if Tesla shares close at $999, the trader’s order of 100 Tesla shares will be executed at market close.