Stop-Market orders are instructions to buy or sell a futures contract once the Mark Price reaches a specific Stop Price that you define. These orders are conditional and come into effect only when the Stop Price is reached. Once the Stop Price is reached, a market buy or sell order is immediately activated. It's important to emphasize that the Trigger Price for a stop order can only be determined using the Mark Price. For a Buy stop order, the Stop Price must be set below the current Mark Price, while for a Sell stop order, the Stop Price must be set above the current Mark Price. A stop order progresses through three distinct stages:

1. Untriggered: This state occurs when the market has not yet reached the Trigger Price.

2. Triggered: When the market reaches the Trigger Price, the stop order becomes active and is entered into the order book.

3. Filled: Once activated, the stop order is executed as a market order.

Here's an example to illustrate how it functions: Suppose the current price is $100. By employing stop-market orders, you can establish a Stop Buy Price at $95. If and when the price reaches $95, a market order will be executed at the best available price for the specified quantity. If the price does not reach $95, the order will remain active without execution.

 For information on further order types, visit Delta Order Types. For video demonstrations, visit the Delta Youtube channel.