Limit moves exist on the futures exchange to prevent excessive volatility in a particular market.
The limit move acts as a circuit breaker and is the maximum amount of change that the price of a commodity futures contract is allowed to undergo in a single day. This amount gets its basis from the previous day's closing price. Trades are not permitted to rise above or drop below the set price once reaching the limit. The exchange where the futures contract trades will set the limit move.
What are Price Limits?
The U.S. stock futures price limit is triggered when stock-index futures, in trading outside the New York Stock Exchange’s 9:30 a.m. to 4 p.m. Eastern trading session, move 5% above or below a reference price set in the final 30 seconds of trading in the previous session, according to CME Group’s website.
When stock futures hit such levels, known as “limit up and limit down,” they aren’t allowed to move any higher or lower.
7%, 13%, and 20% swings for ES(S&P500)
A fall of 7% for the ES once markets open would trigger a separate circuit-breaker rule that pauses market-wide stock trading for 15 minutes.
If the ES were to extend a fall to 13% on the day in the regular stock market session once trading resumes after a 7% halt, it would trigger another 15-minute halt. Trading wouldn’t stop if the decline occurred after 3:25 p.m. A 20% drop in the ES would trigger what’s known as a level three circuit breaker, which would stop trading for the remainder of the session.
[Do check on CME website for any new updates or changes)
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A Limit move tables that was listed on CME website.
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