Lock Limit
A condition where a futures contract hits its maximum allowable daily price move, effectively halting further trading.
What is Lock Limit?
A lock limit occurs when a futures contract reaches the exchange-imposed maximum daily price move—the 'daily price limit'—and trading cannot proceed because no orders can be executed beyond that price boundary. If the price hits the limit-up level (maximum upward move), sellers disappear because no one wants to sell at the ceiling; if it hits limit-down (maximum downward move), buyers vanish because no one wants to buy at the floor. The contract is 'locked' at the limit price with no transactions occurring. Lock limits are implemented by exchanges such as the CME to prevent extreme volatility and give market participants time to assess new information. They differ from circuit breakers, which pause all trading for a period of time. A contract can be locked at its limit for multiple consecutive sessions if the underlying fundamental shift is large enough.
Example
In March 2020, lean hog futures hit limit-down for several consecutive sessions as COVID-19 disrupted pork demand. The contracts were locked at their daily price floor, meaning no trades could be executed below that level—leaving sellers unable to exit positions and creating significant basis risk for hedgers holding offsetting physical inventory.
Source: CME Group — Daily Price Limits