0

So why would someone buy a stock HCM at an ask of $40.00 and a bid at $25.00? The spread is so large how could you make money?

3

That wide of a spread just means that there is very little liquidity (few buyers and sellers) in the stock, which just means that it's harder for the stock to overcome the spread than for more liquid stocks. It's not impossible, but if you buy the stock at $40, then you'd have to wait for enough people willing to sell the stock to raise the asking price above $40 to make a profit.

2

You could just hold the stock until the bid price rises to above the ask price you paid for it. Such a wide spread indicates that there may be a lot of uncertainty in the value of the underlying asset. Maybe you know something the rest of the market doesn't (hint: you don't). Or maybe it's so thinly traded that there isn't much of a market for it at all.

0

When market is close, there is no trading operations. Your broker could do two things: (a) simulate the market at close price, it will act as intermediary, but you will see "virtual" spread or (b) giving you naked version of market during off-hours with small number of participants.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.