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I've noticed on a few stocks (NYSE:WHR, NYSE:PHM), that during extended hours trading, the bid/ask spread becomes extremely large. For example:

Mar14th WHR closed at ask $78.10, and bid $78.30, and then after hours, quickly change to $77.72/$78.09, then 6pm it was $76.60/$78.09. When it hit midnight, $76.50/$80.25.

That's a really big spread in comparison to where it close at, and then where it opened at ($77.89/$78.56) the next morning.

Is this just a matter of, after hours there's fewer brokers buying and selling and it's a tougher market? Or is there something else at play to cause such a large spread?

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Here is a direct answer from investopedia

I won't rewrite the answer here, but you are spot on. It is just an absence of liquidity.

Edit: I hope you don't mind me taking the answer a step further, but the high bid ask spread is one of the reasons ah trading is more difficult. If you incorrectly put in a bid order with a price $10 over the lowest ask, it will get filled very close to the lowest ask. If you make the same mistake in AH trading you might clear out all the lower ask prices and end up filling a substantial number at a dollar value much higher than you intended.

  • Not only don't I mind you taking the answer further, I would encourage it! Thank you very much! – Drew Jan 19 '13 at 3:19

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