DEFINITION of 'Market-On-Open Order (MOO)'
An order to buy or sell shares that specifically requests execution at the opening price. Market-On-Open (MOO) orders can only be executed when the market opens, and at no other time during the trading day. MOO orders on the Nasdaq can be entered, canceled or amended from the time the system opens at 7 a.m. to 9:28 a.m. EST. The MOO order does not specify a limit price, unlike a Limit-On-Open (LOO) order that specifies one.
BREAKING DOWN 'Market-On-Open Order (MOO)'
Traders and investors use MOO orders when they believe market conditions warrant buying or selling shares at the open. For example, during earnings season – the time period when companies report their quarterly results – most companies report results after markets close. Significant action typically follows on the next trading day. Companies that exceed expectations generally see their stocks rise in price the next day, while companies that miss estimates see their stocks decline.
Assume you hold 1,000 shares in Intel, which has just reported that sales and earnings for the next quarter will be below analysts’ estimates. The stock trades lower in the after-hours market, and you think it will continue to decline sharply tomorrow. You would therefore enter a MOO order since you think the stock will open tomorrow at a lower price but close even lower.
The risk is that you would receive the opening price on Intel whether it’s down 5%, 10% or 20%. On the other hand, if you think the stock does not warrant a 10% decline and would rather hold it than take such a loss, you could enter a LOO order, which specifies the price at which you are willing to sell your Intel shares. This would guarantee that your Intel shares will be sold only at a certain price upon market open, and not below your limit price.