Stock Trading: Next Steps· Lesson 7 of 8· 6 min

Call Auctions and the Opening Price

Before the open, the exchange collects orders without filling them, then at the bell finds the price that matches the most volume and fills everything at once. See how the opening price is "calculated".

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Text version · Stock Trading: Next Steps, lesson 7: “Call Auctions and the Opening Price”

Before the open: collect orders, no fills

During a call auction, the exchange first collects buy and sell orders without filling any. In China's A-share market, for example, the opening auction runs 9:15–9:25 and everything is matched at once at 9:25.

Pick the price with the most volume

For each price, count how many shares are bid at that price or higher and how many are offered at that price or lower; the smaller of the two is the volume that can trade. The price with the most volume becomes the opening price.

Everyone trades at one price

A buyer bidding 10.10 and a seller asking 9.90 both trade at the 10.00 opening price, and neither loses out. After that comes continuous trading, where orders are matched as they arrive. Times and details differ between exchanges.

Key takeaways

During the call auction orders queue but don't fill. At the bell, every order that can trade fills at one single price.
The opening price is usually the one that maximizes volume. Higher bids and lower asks fill first.
The indicative opening price shown during the auction keeps changing as new orders arrive and is fixed only at the last moment.
After the auction comes continuous trading, where orders are matched as they arrive. Times and rules differ by exchange.

Try it yourself

You can do these exercises in this lesson's interactive simulation:

Pick "Balanced" and press ▶: does the amber row (indicative opening price) move along the way? What's the opening price at 9:25, and how many shares trade?
Play "Good news" and "Bad news" once each: what's the opening price each time? How far is it up or down from yesterday's 10.00 close?
Go back to "Balanced" and click "Add my order" (default: limit buy 300 shares at 10.05): how many shares did you get? Was the fill price 10.05?
Change my order to "Sell", limit 9.85, 1,000 shares: how far down is the opening price pushed? What's your fill price?

Quiz and explanations

1. In a call auction, buyers want 800 shares at a certain price and sellers offer 500. How many shares can trade at that price?: Answer: 500 shares.Volume = min(buy quantity, sell quantity) = 500 shares. The extra 300 shares of buy orders have no one to trade with.
2. Three candidate prices can match: 500 shares at $9.95, 800 shares at $10.00 and 300 shares at $10.05. Where will the opening price be set?: Answer: $10.00.The opening price is the one with the most volume: 800 shares at $10.00.
3. During the call auction you placed a buy at $10.10, and the opening price comes out at $10.00. What's your fill price?: Answer: $10.00.Bids above the opening price fill first, and every trade settles at the single opening price of $10.00, not the $10.10 you entered.

Terms in this lesson

call auction (Call Auction): Orders are collected for a while without trading, then all matched at once at a single price, often used at the open and close.
continuous trading (Continuous Trading): Normal trading after the open: each new order is matched against the order book as soon as it arrives, so the price changes with every trade.
opening price (Opening Price): The first trade price of each trading day, set by an opening auction at many exchanges.
price-time priority (Price-Time Priority): The matching rule: better-priced orders fill first, and orders at the same price queue in the order they arrived.