What It Means
A Cover Order (CO) is an intraday order type that requires you to place a compulsory stop-loss alongside your entry, in exchange for higher leverage than a plain MIS order.
How It Works
The stop-loss isn't optional — it's part of the order itself, which is why the broker is willing to extend more buying power than an unprotected MIS position. SEBI's phased peak margin rules (25% of standard margin from December 2020, rising to 100% by September 2021) trimmed how much extra leverage a CO can offer today compared to before 2020, though the compulsory stop-loss structure still applies wherever it's offered.
Warning
You can typically only modify the stop-loss to reduce your risk, not widen it — new traders are often surprised the stop-loss can't just be loosened once the trade is running against them.