Market Order vs Limit Order: A Real 5% Gap Open on SPY

On Monday 24 August 2015, SPY (the S&P 500 exchange-traded fund, or ETF) opened at $187.49 a share. It had closed at $197.63 on the Friday before, so it opened 5.1% lower. A jump like this, between one close and the next open, is called a gap open.

A market order to sell 100 shares, sent over the weekend, would have filled at or near that opening price. That is $1,014 less than the same shares were worth at Friday's close. A limit order would have refused to sell below a price set in advance, but it might not have sold at all. This guide explains both order types on real prices, plus stop orders.

A market order is "an order to buy or sell a security immediately", according to Investor.gov, the investor website of the US Securities and Exchange Commission (SEC). It "guarantees that the order will be executed, but does not guarantee the execution price."

Every share has two prices at any moment. The bid is the highest price a buyer will pay. The ask is the lowest price a seller will accept. The gap between them is the spread.

A market order to buy fills at or near the ask, while a market order to sell fills at or near the bid. Investor.gov adds a warning: the last-traded price "is not necessarily the price at which a market order will be executed". We explain who sets the bid and the ask in What Does a Market Maker Do?

A limit order is "an order to buy or sell a security at a specific price or better", according to Investor.gov. A buy limit order fills only at the limit price or lower. A sell limit order fills only at the limit price or higher.

The catch is that "a limit order is not guaranteed to execute." If the price never reaches your limit, nothing happens. We show how orders wait in a queue until they match in How Does the Stock Market Work?

Orders also have a time limit. A day order lasts only for the trading day it is entered. A Good-Til-Canceled order stays open until it fills or you cancel it, within limits set by your investment platform.

A stop order, also called a stop-loss order, waits until the price reaches a level you set, the stop price. Investor.gov says that "when the stop price is reached, a stop order becomes a market order." The price received "can deviate significantly from the stop price."

A stop-limit order becomes a limit order instead. It controls the price, but "may not be executed if the stock's price moves away from the specified limit price."

SPY's issuer, State Street, publishes the fund's 30-day median bid-ask spread. That is the typical gap between the bid and the ask, measured every 10 seconds over 30 days.

On 7 October 2026, State Street's fund page showed 0.00%. Rounded to two decimals, that means the spread was below 0.005%. With SPY at about $777 that day, that is less than 4 cents a share.

We look at what SPY holds and costs in What Is an Index Fund? Every ETF trade crosses this spread, as we explain in Index Funds vs ETFs.

So in normal hours, a market order on SPY costs very little beyond the quoted price. The choice matters most when the price jumps, as it can between one close and the next open.

Regular US trading runs from 9:30 am to 4:00 pm Eastern Time (ET), according to the Financial Industry Regulatory Authority (FINRA), the US industry regulator. Say a market order is set for regular hours only. If it is sent at night or over a weekend, it cannot fill until the next open.

At 9:30 am, the main exchange for each share runs an opening auction, according to SEC staff. The auction matches the orders that built up while the market was shut. So a market order placed overnight fills at or near the opening price, which can be far from the previous close.

Trading before the open and after the close is also possible. FINRA says it carries risks "such as lower liquidity and higher volatility." That means fewer buyers and sellers, with prices that move more.

The chart shows SPY from the Friday close to the Monday close. The dashed line marks a limit order to sell at $195, which we come back to below.

SPY had fallen on each of the four trading days before, from 18 to 21 August, closing at $197.63 on the Friday. On Monday it opened at $187.49, 5.1% lower. SEC staff found it was SPY's second-largest fall from a close to the next open in the decade to that day.

The price kept falling after the open. SPY's low of $182.40, 7.7% below Friday's close, came by 9:35 am, according to SEC staff. By 9:40 am, it was back above its opening price. It closed at $189.50, down 4.1% from Friday's close.

A market order to sell 100 shares, placed over the weekend, would have filled at or near $187.49. That is $18,749 for shares worth $19,763 at Friday's close, a gap of $1,014. An order that reached the market a few minutes later could have filled lower still.

Now take the limit order to sell at $195. It would not have filled at the open, because the price was below the limit. SPY traded as high as $197.48 that day, so the order could have filled later in the session. On a day that kept falling, it would never have filled.

A gap can also carry the price straight past a stop. On 24 August 2015, a sell stop set a little below Friday's close would have turned into a market order at Monday's open.

The chart counts the days each year when SPY opened at least 2% above or below the previous close. From January 1994 to 6 October 2026, that happened on 148 of 8,245 trading days, or 1.8%. On the median day, SPY opened 0.28% above or below the previous close.

Big gaps bunch together. There were 32 in 2008, the year of the global financial crisis. There were 27 in 2020, the year of the pandemic. In 2025 there were eight, six of them in April.

Twelve of the years shown had none at all. So far in 2026 there has been one, on 8 April.

A market order trades now at whatever price is available. A limit order trades only at your price or better, if it trades at all. The difference is small in calm, open markets. It can run to dollars a share when the market opens far from the last close.

This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.

The same approach runs through everything else we publish:

Good places to start on the website:

A market order buys or sells straight away at the best price available. A buy fills at or near the ask, the lowest price a seller will accept. A sell fills at or near the bid, the highest price a buyer will pay. The US Securities and Exchange Commission says a market order is certain to execute, but its price is not guaranteed.

A market order sent outside trading hours waits for the market to open, unless it is set to trade before the open or after the close. It then fills at or near the opening price. On 24 August 2015, SPY, the S&P 500 fund, opened 5.1% below its previous close. A market sell order placed over that weekend filled at or near that lower price.

Yes. A limit order fills at the limit price or better. A buy limit can fill at the limit or lower. A sell limit can fill at the limit or higher. The price is protected, but the order is not guaranteed to fill. It fills only if the market reaches the limit price.

A stop order waits until the price reaches a set level, then becomes a market order. It is certain to trade once triggered, but the price can be far from the stop. A limit order trades only at the limit price or better. A stop-limit order combines the two: it becomes a limit order once triggered.

DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.