How It Works
Let's assume that the following buy orders for Company XYZ stock are received:
Buy 1,000 shares @ $4.25
Buy 500 shares @ $4.00
Buy 700 shares @ $4.50
Buy 500 shares @ $4.25
Sell 1,000 shares @ $4.25
Sell 500 shares @ $4.00
Sell 700 shares @ $4.50
Sell 500 shares @ $4.25
In a call market, the buy orders are grouped together and executed at a price and time that will clear most of those orders. In this case, that price might be $4.25. Note that even though some of the parties were willing to buy or sell for $4.00, the price that clears most of the transactions is $4.25, and that is the price at which the exchange's market analyst executes these trades in a call market.
A call market is different from an auction market, whereby buyers and sellers trade continuously.
