# Why most of apple stock price since 10years have been gained overnight?

I've been playing with stock data and I've discovered a terrible truth : in 10 years apple stock price passed from roughly 3\$to 100$. However this gain isn't due to intraday price variation dayN_close - dayN_open but the overnight variation dayN_open - dayN-1_close.

In fact when you sum up the intraday variation since 10years you get roughly -48$ drop in price (starting at 3\$ in 2004) while when you sum up the overnight variation you get +148$ augmentation in price (148-48=100$ nowadays).

This mean that the reason why apple stock price went from 3 to 100 in 10years is the overnight variation in price. This is quite unexpected, if there was no overnight variation the stock price would have died a long time ago... Why is that ? Why do they say that intraday traders close their position at then end of day while most gains can be done overnight (buy just before the market close and sell just after it opens). Is this observation true for other symbols too or is it specific to apple ?

Edit : Well I performed some additional analysis and it turns out that the gain due to overnight variation is because over 10 years the frequency of the o/n variation being positive is by far superior to it being negative. As for the intraday variation the probability of it going downwards is slightly superior to it going upwards. However the variations that are high (>3% let's say) are more frequent intradaily. o/n variation tends to be small but steadily positive basically. As for the data I took it from nasdaq.com so I hope it isn't glitchy.

• What is your question? The simple answer to the question in your header is that more price impacting news hits the wires after market close and before market open. Also, Apple derives most of its revenues and earnings from outside the U.S. Whats so surprising? – Matt Sep 22 '14 at 5:47
• The world doesn't stop when the markets close! Events keep "occurring", news gets "generated" and it all gets impounded in the price. What's so strange about this? – g_puffo Sep 22 '14 at 17:27

This mean that the reason why apple stock price went from 3 to 100 in 10years is the overnight variation in price. This is quite unexpected, if there was no overnight variation the stock price would have died a long time ago... Why is that ? Have we been lying to us ?

This is because many business and financial news are reported at market close, either pre-market or during after-hours. This includes quarterly and annual financial results. This allows financial operators to go through the material, analyze the data, digest the news and "price in" new information. Open prices "jump" wrt closing prices of the previous trading day on new, relevant, information released by the companies.

As correctly suggested by @g_puffo, some trading venues offer extended hours trading (after-hours and pre-market). This is the case of the Nasdaq, where AAPL is listed: http://www.nasdaq.com/extended-trading/ Extended hours sessions give an opportunity to react on news, but there are several caveats: http://www.sec.gov/investor/pubs/afterhours.htm

Why do they say that intraday traders close their position at then end of day while most gains can be done overnight (buy just before the market close and sell just after it opens). Is this observation true for other symbols too or is it specific to apple ?

Intraday traders do not carry overnight exposures because.. well, they trade intraday. Their strategies are designed to profit from intraday market moves, determined by the market activity of other stock operators. They do not "invest", ie they do not aim at anticipate business developments and company financial news. This is why they liquidate their positions before/at market close.

• I see but then how is determined the opening price ? Isn't it unfair that the most important variation in price happens when no one is able to react ? – Wicelo Sep 21 '14 at 12:05
• If indeed no one is able to react, then whom is it unfair to? I would think that when Apple releases financial results, they have the "real" shareholders in mind, rather than intraday traders. – Shahar Sep 22 '14 at 3:09
• @Wicelo Everyone is able to react next morning, and this would be not much different if they'd react during the trading session - price goes up in under a second because HFT guys catch it much earlier than others anyway. – sashkello Sep 22 '14 at 6:07
• @Wicelo: if you are interested on the mechanics that lead to the determination of the opening price of AAPL on the Nasdaq, you can start from here nasdaq.com/reference/opening_cross.stm and here: nasdaqtrader.com/content/TechnicalSupport/UserGuides/… – pincopallino Sep 22 '14 at 10:40
• Maybe I'm missing something but several trading venues offer "after hours" trading, so it's not entirely true that once the "markets close" one cannot trade anymore... Clearly the volume and the depth in the after hours market is much smaller but still, if you want you can now trade as long as you want. @pincopallino nice link thanks for posting and, also, another reason why intraday traders don't carry positions over night is simply because they don't want to take the risk of adverse news impacting their positions. – g_puffo Sep 22 '14 at 17:21