A gap up or down in stocks refers to a significant change in a stock’s price between the market close of one day and the market open of the following day. A gap up occurs when the stock opens at a higher price than it closed the previous day, while a gap down happens when the stock opens at a lower price. These gaps can be caused by various factors, including news, earnings reports, and changes in market sentiment.

Here is extreme example of TOP on 4/28/23
On 4/27/23, TOP close at $20
On 4/28/23 TOP opened at $69
A 49pt gap up or 245% Gain.

After-hours trading, which takes place outside regular market hours, can contribute to gaps in stock prices. This is because the limited liquidity and lower trading volume during after-hours trading can result in greater price fluctuations.

There are several factors that can push a stock up or down after hours:

  1. Limit orders: During after-hours trading, traders predominantly use limit orders to buy or sell a stock at a specific price or better. These orders can contribute to price movements, as they may not be immediately executed and can build up on the order book, creating supply and demand imbalances.
  2. News-related trades: Breaking news, earnings reports, or other significant events can influence traders to buy or sell a stock, driving prices up or down. Since market participants may react to the news by placing limit orders, the stock price can experience notable fluctuations.

Float and volume are important factors in understanding stock price movements:

  1. Float: The float refers to the number of shares of a company’s stock that are available for trading in the open market. A smaller float can lead to more significant price fluctuations, as there are fewer shares to absorb buying and selling pressure.
  2. Volume: Trading volume represents the number of shares that are bought and sold during a given time period. Higher volume indicates more liquidity, making it easier for traders to execute orders at desired prices. During after-hours trading, volume is typically lower than during regular market hours, which can contribute to more significant price swings.

In after-hours trading, the bid-ask spread also plays an important role. The bid is the highest price a buyer is willing to pay for a stock, while the ask is the lowest price a seller is willing to accept. The spread is the difference between the bid and ask prices. Wider spreads are common during after-hours trading due to lower liquidity and can result in larger price gaps between the market close and the next day’s open.