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Non-Tech : MB TRADING
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To: Steve Lin who wrote (1634)10/28/1998 9:05:00 PM
From: Eric P  Read Replies (1) of 7382
 
Steve:

A legal short position can be entered in during both an uptick bid and a downtick bid as follows:

Uptick bid: The short can be entered at any price. => You can place a market order to sell at the bid or post an offer at the ask, above the ask or between the bid and ask. Sounds easy!

Downtick bid: The short can only be entered at a price which is at least 1/16 point above the inside bid. This disallows placing a market order to sell short at the bid. Assume a stock is on a downtick bid, and trading at 60 bid, and 60 1/8 offered. A trader can legally post an ISLD order to sell short at or above 60 1/16. The trader could also preference market makers, etc. at or above 60 1/16.

I hope this clarifies the rules for short selling.

Good Luck,
-Eric
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