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Non-Tech : Datek Brokerage $9.95 a trade
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To: Ginger Bates who wrote (952)1/18/1997 2:26:00 PM
From: Roderick Ciferri   of 16892
 
Ginger:

The "uptick rule" is a NASDAQ rule which allows short sales only when the last tick in the trading of a particular stock was an uptick.

When you short a stock you are essentially betting that it will go down. What happens is that you borrow the shares from your broker. At some point you have to replace the shares you borrowed to make your broker whole. You are charged interest while your short position is open. Hopefully, you replace the shares with cheaper stock. The difference between what you borrowed the shares for and what you replace them for is your profit.

Example:

Short sell 1000 shares of ZITL at 40. The stock goes down to 38, where you buy to cover (replace the 1000 shares at the lower price). Less interest and commissions, your profit is $2,000 -- the two point difference between your short sell price and your cover price.

Hope this helps,

rod
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