Wide Open

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
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