> The exchange could nullify all trades in a certain period of time, which would completely wipe out your upside potential.
This is the most important thing: In every single "flash crash", the exchanges have retroactively canceled trades, in a rather arbitrary manner (e.g., "every trade between 16:30 and 16:38 is null and void"). There is some underlying justification, but it is also arbitrary (e.g., "anything below 3% of the price when the flash crash started", with no specific justification for the 3% number, or a well defined methodology for the time of the crash).
That could easily turn a +$100K profit into a -$500K profit, depending on circumstance.
Nitpick: When exchanges have busted trades there is a "at or below $XX.XX" condition as well as the "between XX:XX and YY:YY" condition.
In the Flash Crash as well as the Knight Capital incident "up/down 30% from the Previous Close" was the price collar (anything outside that was busted and anything inside stood).
Of course there is no guarantee that the same criteria will be used the next time around so caveat emptor.
This is the most important thing: In every single "flash crash", the exchanges have retroactively canceled trades, in a rather arbitrary manner (e.g., "every trade between 16:30 and 16:38 is null and void"). There is some underlying justification, but it is also arbitrary (e.g., "anything below 3% of the price when the flash crash started", with no specific justification for the 3% number, or a well defined methodology for the time of the crash).
That could easily turn a +$100K profit into a -$500K profit, depending on circumstance.