Market-On-Open Order (MOO)

A Market-on-Open order is an order to be executed at the day's opening price. Market-on-Open (MOO) orders can only be executed when the market opens, and at no other time during the trading day. MOO orders on the Nasdaq can be entered, canceled or amended from 7 a.m. to 9:28 a.m. EST, Monday to Friday. Execution of MOO orders is guaranteed, providing there is sufficient liquidity. The MOO order does not specify a limit price, unlike a Limit-on-Open (LOO) order that specifies one, and is the sister order to the Market-on-Close (MOC) order.

Traders and investors use Market-on-Open orders when they believe market conditions warrant buying or selling shares at the open. For example, during earnings season – the period when companies report their quarterly results – most companies report results after markets close. Significant price movement typically follows on the next trading day.

Companies that exceed expectations generally see their stocks rise in price, while companies that miss estimates see their stocks decline. MOO orders may also be used by brokers to close error positions. Often errors are not discovered until trades get booked to accounts at the end of the trading day. A MOO order ensures the error is closed out as early as possible on the following day to minimize risk.

Assume an investor holds 1,000 shares in Intel, which has just reported that its sales and earnings for the next quarter will be below analysts' estimates. The stock trades lower in the after-hours market, and the investor thinks it will continue to decline sharply throughout the next day. They would, therefore, enter a MOO order since they believe the stock will open tomorrow at a lower price but close even lower.
 
The risk is that the investor receives Intel's opening price, irrespective if it's down 5%, 10% or 20%. Alternatively, if the investor thinks that Intel may recover somewhat throughout the next trading day and would rather hold their position than take the opening market price, he or she could enter an LOO order, which specifies the price at which they are willing to sell their Intel shares. This guarantees the stock is not sold below the investor's limit price. For instance, if the investor places an LOO order with a limit of $50, the shares would be sold on the open at the market price, providing the stock is trading at $50 or above.

(To learn more, see: Introduction to Order Types.)