Unchanged What It Is How It Works Examples
Unchanged: What It Is, How It Works, Examples
Ariel Courage, an experienced editor, researcher, and former fact-checker, has performed editing and fact-checking work for leading finance publications like The Motley Fool and Passport to Wall Street.
WHAT IS Unchanged
Unchanged refers to a situation in which the price or rate of a security remains the same between two periods. This can be over any time frame, including a trading day, week, or even a year. Unchanged is a universally used term in equity, fixed-income, futures, and options markets. It also applies to indexes, exchange-traded funds, and the net asset value of mutual funds.
While it is possible to note an unchanged price between two random times, such as 3 p.m. on a Thursday and 10:15 a.m. the following Tuesday, most investors and traders focus on either intra-day unchanged prices or unchanged closing prices over multiple trading days.
BREAKING DOWN Unchanged
Unchanged intraday prices are more common for illiquid securities, like closed-end funds, microcap stocks, and interests in private companies that do not trade on major exchanges. Certain exchange-traded funds may also have thinly traded and unchanged prices.
Conversely, very few stocks on the S&P 500 end a typical day with unchanged opening and closing prices, even during calm market periods.
When selecting two random points on a price chart, it is often possible to find identical price points. In this case, the holding period return between these points will be unchanged. However, this doesn’t account for the range of price movements between those points. The investor’s return, excluding fees and expenses, remains unchanged, but the security price likely experienced significant fluctuations.
Examples of Unchanged
For instance, West Texas Intermediate crude, known as WTI, traded at precisely $70.32 at two particular market closes in October 2008 and May 2018. The holding period return between these two points is unchanged, which is useful for long-term futures contract holders during this specific time frame.
The price of oil experienced dramatic fluctuations between these two points, along with changes in supply-and-demand conditions. WTI prices plummeted to less than $40 in January 2009 due to the Great Recession, surged above $100 a barrel in May 2011, then remained relatively stable until July 2014. Subsequently, prices dropped below $30 in February 2016 as shale-oil extraction increased inventories, before eventually reaching $70 in May 2018 as inventories decreased and inflation began to rise.
Even with all these fluctuations, the holding period return, excluding fees and expenses, remained unchanged.
