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What Is Unchanged
Let me explain what unchanged means in the world of finance. It's when the price or rate of a security stays exactly the same between two periods. This can happen over any timeframe you choose, like a single trading day, a week, or even a full year. You'll hear this term used across all sorts of markets, including equities, fixed-income securities, futures, and options. It also applies to things like indexes, exchange-traded funds, and the net asset value of mutual funds.
Sure, you could pick two random times—like 3 p.m. on a Thursday and 10:15 a.m. the next Tuesday—and note if the price is unchanged. But most investors and traders pay attention to unchanged prices either within the same day or comparing closing prices over several trading days.
Breaking Down Unchanged
When we talk about unchanged intraday prices, these are more likely with securities that aren't very liquid or popular. Think closed-end funds, microcap stocks, or interests in private companies that don't trade on big exchanges. Some exchange-traded funds are thinly traded too, making them prone to unchanged prices.
On the flip side, it's rare for stocks in the S&P 500 to end a normal day unchanged, meaning their opening and closing prices match, even in calm market periods.
If you pick two random points on a price chart where the prices are the same, the holding period return between them is unchanged. But remember, this doesn't consider the ups and downs in between. Your return as an investor, ignoring fees and expenses, is zero, yet the price probably swung wildly during that time.
Examples of Unchanged
Take West Texas Intermediate crude, or WTI, as an example. Suppose it closed at exactly $70.32 in October 2008 and again in May 2018. The holding period return between those points is unchanged. This could matter to you if you held a long-term futures contract over that exact period.
But don't ignore the wild ride in between. WTI prices dropped below $40 in January 2009 during the Great Recession, then climbed over $100 a barrel by May 2011. They moved sideways until July 2014, plunged under $30 in February 2016 due to shale oil boosting inventories, and finally returned to $70 in May 2018 as inventories fell and inflation rose.
Despite all that volatility, the holding period return—excluding fees and expenses—remains unchanged.
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