Legal Definitions - hot stock

Definition: A hot stock is a security that, after an initial or secondary offering, is traded in the open market at a substantially higher price.

Example: Company XYZ releases a new stock offering to the public. The stock is initially priced at $10 per share. However, due to high demand and positive news about the company, the stock price quickly rises to $20 per share. This increase in price makes the stock a hot stock.

This example illustrates how a hot stock is a security that experiences a significant increase in price after its initial offering. This increase in price is often due to high demand and positive news about the company, making the stock a popular choice among investors.