Bidding Up - Securities

  

Underneath the stock prices that you can look up on any stock quoting site, there's a dynamic process of bids and asks. A bid is the amount someone is willing to pay for a stock. The ask is the amount the seller is willing to accept.

Regular folks just go to their Ameritrade accounts and pay the market price for the stock at any given time. Wall Street players get into the weeds with the bid/ask, trying to get the best possible price (when you're dealing with millions of dollars, those fractions of a cent per share start to add up).

The phrase "bidding up" has a couple connotations. In its more general sense, it just means something like "sending the stock higher," as in "investors are really bidding up shares of Apple today."

On a more technical level, the phrase can refer to a strategy for acquiring shares at a time when a stock is rising quickly. Basically, if you try to get too cute with your bid when a stock is skyrocketing, you could end up under-bidding the market and not getting any stock at all.

Bidding up means that you take the fact that the stock is rising into account when you place your bid, over-bidding to make sure you find a matching ask. Of course, this process helps fuel the upward rise in the stock, which can last until people finally start saying to themselves, "This is stupid. I'm just going to go buy bonds instead for a while."

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Finance: What are At the Money, In the M...5 Views

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Finance what are at the money in the money and

00:05

out of the money underwater options Who A mouthful Well

00:10

it sounds like something contestants shout during wheel of fortune

00:14

big money out of money at the money and yeah

00:17

hopefully they're not landing on bankrupt Want long actually at

00:22

the money means that stock prices match the strike price

00:27

of the stock options that an investor has bought So

00:31

if you have the right to buy a share of

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fifty bucks and then the share actually is at fifty

00:37

bucks when you go to buy well that share is

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at the money at the money for the strike price

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of the option example Time left Joe schmoe has paid

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three bucks for the right to buy a share of

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ko that's coke for eighty dollars The option expires in

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a week and the stock is at seventy six bucks

00:57

a share today If the stock climbs eighty dollars a

01:00

share ieave bidwell then it is said to be at

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the money or at the strike price If it climbs

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above eighty Well then it's in the money like it

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was eighty for it would be four dollars in the

01:13

money And if it was like one hundred dollars would

01:15

be twenty dollars in the money And well a lot

01:18

less volatile because you know you're going to make money

01:20

and sell it if it's below eighty bucks well it's

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out of the money and said to be under water

01:27

out of the money honey it's Not a good thing

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Note that ko could be eighty two fifty and the

01:33

call option buyer has still lost money on the trade

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because from the call option buyer paid three dollars for

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the call and ko ended up being on ly two

01:41

fifty in the money So if the buyer lost half

01:44

a buck on that trade now the buyer can't afford 00:01:47.606 --> [endTime] to buy anything Not even a vow Well

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