CandleFocus Glossary Editor
XRT is an important indicator used to identify stocks trading ex-rights on the exchange. XRT, meaning "ex-rights", is a suffix printed or displayed beside the stock's ticker symbol to indicate that the stock is trading on an ex-rights basis. When a company offers new shares for sale, existing shareholders may be granted rights to purchase additional shares before the offering is available to the public. Investors who already own the stock at the time of the rights offering are usually offered the same rights as new buyers—this is known as a "rights offering".
Exercising those rights usually means that investors can purchase additional shares at a discounted price. This discounted price can create a situation where investors with the rights are able to make a short-term profit by buying additional shares at a lower price than what new investors will pay for them. When the rights offering concludes and the offering is open to the public, however, the stock begins to trade on an ex-rights basis. This means that any new buyers of the stock won’t receive any rights to purchase additional shares because they have expired.
At this point, XRT is printed or displayed beside the stock's ticker symbol to indicate that the stock is trading on an ex-rights basis. This is important to help avoid disputes or confusion about where the rights currently remain. For example, a trader who buys the stock without the rights could mistakenly expect to be able to purchase additional shares at a lower price, resulting in a dispute or confusion. Meanwhile, XRT indicates that the rights have already expired, so the buyer knows beforehand not to expect the same rights as existing shareholders.
XRT is therefore an important indicator for solving potential disputes or confusion about who has rights to purchase additional shares at a discounted price and who does not. A company's stock will continue to trade on an ex-rights basis for a certain period of time—usually about three months—until the expiration of the rights and the expiration of the locked up period. The expiration of the locked up period usually marks the end of the XRT indicator on the ticker and gives the buyer the chance to purchase additional shares at the current market price without any extra rights attached.
Exercising those rights usually means that investors can purchase additional shares at a discounted price. This discounted price can create a situation where investors with the rights are able to make a short-term profit by buying additional shares at a lower price than what new investors will pay for them. When the rights offering concludes and the offering is open to the public, however, the stock begins to trade on an ex-rights basis. This means that any new buyers of the stock won’t receive any rights to purchase additional shares because they have expired.
At this point, XRT is printed or displayed beside the stock's ticker symbol to indicate that the stock is trading on an ex-rights basis. This is important to help avoid disputes or confusion about where the rights currently remain. For example, a trader who buys the stock without the rights could mistakenly expect to be able to purchase additional shares at a lower price, resulting in a dispute or confusion. Meanwhile, XRT indicates that the rights have already expired, so the buyer knows beforehand not to expect the same rights as existing shareholders.
XRT is therefore an important indicator for solving potential disputes or confusion about who has rights to purchase additional shares at a discounted price and who does not. A company's stock will continue to trade on an ex-rights basis for a certain period of time—usually about three months—until the expiration of the rights and the expiration of the locked up period. The expiration of the locked up period usually marks the end of the XRT indicator on the ticker and gives the buyer the chance to purchase additional shares at the current market price without any extra rights attached.