A day-limit order is a type of order entered through a broker that expires at the close of business on that day. If it is not filled, you must place a similar order on the next trading morning. Unlike market orders, day-limit orders often get filled at
prices between the bid/asked spread. This assures that you will purchase at an acceptable entry price.
When you're entering an option trade (whether buying to open or selling to open), there are a few different ways to achieve this goal. You can set parameters on your cost of entry, the life span of the order itself, and even the manner in which your order
is filled.
For additional information on the most common types of orders, please click here.