I often see this with that are "on the move" but never understood how that is possible. It might "close" on Tuesday with a price of , and then "open" on Wednesday with a price of .50. How can it gain so much overnight, when the market is closed for trading? I know there is "after hours trading", but these stock purchases cannot be registered since the market is closed. How does this happen?

 

  • Jean Val Jean 5:03 pm on August 31, 2010

    There is after hours trading….and the price of a stock is open for bids, so to speak so just because a stock closed at one price there is no rule that it must open at that price. Example if a stock closed at 12.00 and at the opening bell there were more orders to buy than there were to sell that means that the price would be bid up and the buy orders would be filled by the highest bidders.

  • Steve D 5:03 pm on August 31, 2010

    Although teh market is closed (except for after-hours) you can still place an order over-night that will be executed when the market opens. The first trade is the "open price" so if the market closed at $10 on a stock and I thought it was going to jump today, I might make a buy offer at $12.50 on market opening, creating the opening price.

  • Kev's Girl 5:03 pm on August 31, 2010

    Sometimes the company issues news early that day that will effect the price such as a take over or a very good trading update. The mms may feel that the stock will trade higher because there is a shortage of stock against the potential buys for that day. The stock has been tipped by a newspaper or online website.

  • slun80 5:03 pm on August 31, 2010

    When the bell rings, that stops any new trades from being ordered. The trades that have been placed but have not come through yet affect the next day’s opening price. Same thing happens overnight. If GE stock dropped to $4/share when the market closed and everyone on Earth decided they’d buy, then the price would jump overnight. By the time the market opened the next morning, it would cost you more than $4/share.

  • jerry w 5:03 pm on August 31, 2010

    Assuming the stock is actively traded, the closing price is the price of the last trade. The opening price for the next day can be different because orders placed overnight may push the price up or down, or the stock may have traded on other exchanges with different trading hours.

    It has happened that the closing price was very different that the next day’s opening price for virtually all stocks at the same time. During the stock market crash on October 19, 1987, the NYSE closed early to prevent further free-fall. With trading halted the closing price could not accurately reflect what the market price should be to open the next day. Specialists on the exchange were in charge of offsetting excess sell orders with buy orders in an attempt to stabilize prices at a fair market value above what the panic selling might create.

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