AOL won’t spin-off from Time Warner until December 9, but the company told the SEC today it expects trading of its stock will begin as early as tomorrow.
How is that possible?
Through the magic of “when-issued” trading, where people can trade stock they don’t physically have in their hands yet.
Here’s how it’s defined on MIT.edu:
When-issued trading is forward trading of securities that takes place before the securities are issued. Such trading can take a variety of forms, such as betting (with cash settlement) or OTC trading (with physical settlement). When-issued trading commonly occurs in Treasury markets, but also in some IPO markets. When-issued markets can be seen as prediction markets that predict the pricing of securities issues.
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