Wide Open

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DEFINITION of 'Wide Open'

The gap between a stock's bid price and the ask price at the commencement of trading. A wide open often occurs when there is a scarcity of competitive bid and ask prices or when trading has been suspended for whatever reason.

BREAKING DOWN 'Wide Open'

This situation can arise because market makers and market participants have yet to submit their bid and ask prices to the market, leaving very few (uncompetitive) orders to appear as the lowest ask and highest bid price.

Wide opens are generally indicative of a thinly-traded stock, i.e. an issue that is not very liquid. Many Over-The-Counter Bulletin Board and pink sheet stocks (penny stocks) routinely feature wide opens, as well as wider bid-ask spreads throughout the trading day. Wide opens and higher spreads can make it difficult for momentum traders and others to gauge market direction.

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RELATED FAQS
  1. Do penny stocks pay dividends?

    Because of the small market capitalization and revenues typical of most penny stocks, there are very few that offer dividends. ... Read Full Answer >>
  2. Can you buy penny stocks in an IRA?

    It is possible to trade penny stocks through an individual retirement accounts, or IRA. However, penny stocks are generally ... Read Full Answer >>
  3. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
  4. Where can I buy penny stocks?

    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>
  5. Why would you undertake a reverse split?

    Most reverse stock splits are undertaken by small, micro penny stocks that need to maintain the minimum price requirements ... Read Full Answer >>
  6. Why would a company perform a reverse stock split?

    A company performs a reverse stock split to increase its share price. The desire to increase the share price is usually driven ... Read Full Answer >>

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