Zero Uptick

Zero uptick, a.k.a. zero plus tick, is a mixture of hope and sorrow concerning how much a security sold for over time. Bad news first: zero uptick means that the time the security was recently traded is the same as last time it was traded. Meaning that, if a security sold at $20 last, it also sold at $20 before that, ergo the “zero.”

The good news? “Uptick” means that the time before the second-to-last time, it was sold for less. For instance, maybe a security was sold for $18, then $20, and now $20 again. See the uptick?

Let’s make sure we got this. That last $20 is considered a zero plus tick because 1) the time before the most recent trade it was sold at the same price (also $20), and 2) the time before that time, it was sold for even less ($18). This goes for stocks, bonds, commodities, and other tradable securities.

Can you guess the reverse? It’s zero minus tick, or downtick, meaning it went down in price, but the most recent trade is the same price as the one before.

Time’s a-ticking for insecure securities. The whole reason zero upticks are a thing is because the SEC said “you can only short sell on an uptick, not on a downtick.” This is because a zero uptick theoretically implies that the price of a stock is rising, rather than just going through a short blip-of-a-fluctuation.

Economic legend has it that manipulative investors were short selling pre-upticks (or on downticks), which made shareholders nervous enough to sell their shares at a steal of a deal, which might have helped lead to the stock market crash in 1929. Nbd. In 2007, the uptick rule was lifted, but then 2008 and happened, and a similar uptick rule as before was put in place in 2010. Because apparently we can’t handle the market without the uptick rule.