Uptick rule, anyone know why it exists?

Discussion in 'Trading' started by bigscalper, Jul 2, 2002.

  1. bigscalper

    bigscalper Guest

    Does anyone know why the Uptick rule exists when traders can just use a Bullet or Forward Conversion to short on a downtick. The only people that seem to be negatively affected by this rule in the small retail investor who doesn't have access to the Bullet or conversion, or maybe doesn't know these products are out there.
  2. m22au


    Not all traders are at professional firms with access to bullets and conversions. Hence the uptick rule has some use.
  3. The use of bullets and conversions have come about to get around the uptick rule. They are a loophole.
  4. m22au


    Not all traders are at professional firms with access to bullets and conversions. Hence the uptick rule has some use. Not everyone has access to the "loophole" of bullets and conversions.
  5. it is an attempt to avoid huge stock drops created solely by short selling. It prevents massive piling on of bearish traders so that ultimately the investors have to sell out for the stock to really tank during the trading session.

    Bullets as I understand them are really an options strategy and to create a bullet you must first purchase the stock and then sell a call and buy a put. Then you sell the long stock which just leaves you with the options. You aren't shorting the stock, so you aren't pushing the stock down yourself, so the uptick rule is not broken.
  6. Help! Has anyone seen my uptick today? They all seem to be hiding...5000 on the dow?
  7. Babak


    A result of the crash of 1929. We have to thank countless congressional hearings for the creation of the uptick rule (along with the creation of the SEC). The same shennanigans were taking place (fraud, manipulated stock prices, false fin stmts). People needed to tar and feather someone, so they chose the shortseller.
  8. The only thing I see in an uptick is the heat, if this keeps up the temperature will be higher than the Dow
  9. Uptick rule, anyone know why it exists?

    To make the SEC feel like they actually have some pull...they've made the public believe that shorting is bad, so the effect of the rule is to make the public think that the SEC is good, when the reality couldn't be further from that.

    Pretty good scheme on the SEC's part; it's worked for decades.

    Feel free to tell the SEC how much they suck at chairman@sec.gov. I send them an e mail every couple weeks commenting on their systematic and reliable failure to protect investors. Maybe they could boot 'ol whatshisface and get Spitzer to be the new chairman.
  10. Shorting IMO does not tank markets,because of the stupid uptick rule where buyers are required to take the short offer,otherwise shorts wouldn't be able to get short.
    #10     Jul 2, 2002