opening transaction

Opening transaction

Applies to derivative products. (1)Buy or sell transaction that creates a position out of a flat one (writing an option short or buying an option long). Antithesis of closing transaction. (2) First transaction of the day in a stock.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Opening Transaction

1. In options contracts, the transaction which starts either a long position or a short position. For example, if an investor writes a put option and then later exercises the option, the initial writing of the option contract is referred to as the opening transaction and its exercise is the closing transaction, because it closes a position. The opening transaction is thus an investor's first trade in a series of at least two related trades.

2. The first trade on a given security on a given trading day. This especially refers to the price at which the security is traded. Investors like to know the price of the opening transaction because it gives them a comparison to the prices of the previous trading day, which helps them attempt to predict short-term trends. It is also important to investors who placed orders for a security after the close of the previous trading day: the price of the opening transaction is the price the investors will pay or be paid.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

opening transaction

1. The initial transaction during a trading day for a particular security. The price at which an opening transaction takes place is important to investors who have placed market orders before the market opens or who have placed at-the-opening orders, because the price at which the opening transaction takes place is the price that these investors will pay for or the price they will receive for the security. Compare closing transaction.
2. An option order that establishes a new investment position or that increases the size of an existing investment position. Compare closing transaction.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Purchases must not constitute the opening transaction or occur during the last half hour of trading, or the last 10 minutes of trading for issuers who have an average daily trading volume (ADTV) of $1 million or more and a public float value of $150 million or more.
Adding this option with the account opening transaction can immediately increase commitment and simplify the entire process.
Period 1 for nontrading-hours announcements is the first 15-minute trading period after the opening transaction. We also present overnight returns for day +1 and for the first two 15-minute trading periods after the opening of trading on day +1 for all samples.
During the half hour after the opening transaction, significant but relatively small abnormal returns are earned: 0.12% in the first 15 minutes and 0.09% in the next 15 minutes.(28) After that, significant abnormal returns are not observed until period +6, and no significant abnormal returns accrue during the overnight period following the release or during the first half [TABULAR DATA FOR TABLE 5 OMITTED] hour of trading the following morning.(29) Figures 5 and 6 contain graphs of the CARs calculated from the abnormal returns presented in Tables 4 and 5.
Thus, abnormal trading volume for period 0 is abnormal volume observed during the opening transaction. As Tables 8 and 9 show, we observe significant positive opening abnormal volume on the NYSE but not on the NASDAQ.(38) This is not surprising since the opening transaction on the NYSE is a batched transaction (i.e., [TABULAR DATA FOR TABLE 6 OMITTED] [TABULAR DATA FOR TABLE 7 OMITTED] [TABULAR DATA FOR TABLE 8 OMITTED!
Examining opening prices, we find that, on average, about 90% of the initial day's mean return is earned on the opening transaction and that the subsequent average intraday return is smaller than conventional estimates of transactions costs.
Nonparametric tests provide striking evidence that the first day's return on IPOs is earned at the opening transaction. We report results based on median returns in Exhibit 4.
Summing up, we find that the underpricing of operating-company IPOs is a phenomenon that is largely restricted to the opening transaction. The underpricing is almost entirely "corrected" by the market at the open.
- Client Support services that includes investor capital support, trading support, market analysis report, and opening transaction accounts for clients.
Instead of opening transaction bank accounts, farmers will be purchasing green oil through a company that the Government is going to select in a tender so that their access could be rendered as easy as possible.
After the completion of the opening transactions at 0945 CET, the ATX stood at 2,738.36 points, up 0.7%, or 19.11 points from the previous close.
The firm also performed opening transactions for customer and proprietary accounts that exceeded the applicable position limit in certain OTC options.