LookAway

"Lookaway" is a term that most commonly refers to the price at which a market maker or specialist is unwilling to buy or sell a security.

It signifies a point where the quoted price is deemed too unfavorable for the market maker to execute a transaction, effectively causing them to "look away" from the incoming order.

 Lookaway in Financial Markets

In the context of finance and market making:

• Role of Market Makers: Market makers are financial professionals or firms that stand ready to buy or sell a particular security at specified prices (the bid price and the ask price). Their profit comes from the spread (the difference between the bid and ask price).

• The Lookaway Price: When the market maker believes the current market price is moving too rapidly, or if the order size or risk associated with the transaction is too great, they may quote a "lookaway" price. This price is deliberately set to be so far from the prevailing market rate that it is highly unlikely any order will be executed against it.

• Purpose: The lookaway is used by market makers as a risk management tool to temporarily step back from a volatile market without officially withdrawing their quote completely. It signals to others that they are temporarily unwilling to take on more risk at current levels.

Other Contexts

The term can also be used in non-financial, behavioral contexts:

• Behavioral Context: In social interaction or analysis, a "lookaway" refers to the act of averting one's gaze from another person or object. This can signal discomfort, shyness, avoidance, or a break in attention.