What is Eighthed?
To get eighthed is to be outbid or undercut by one-eighth of a dollar (12.5 cents).
How Does Eighthed Work?
Let's say Company XYZ is a big pension fund. The DEF pension fund is trying to sell the shares in the upstairs (i.e., privately, between two parties rather than on the market) because it knows that the trade have a significant impact on the value of the ABC shares and it might not be able to unload all the shares at once.that wants to buy 500,000 of ABC Company from the DEF pension
Company XYZ offers $15 a share for the. Word is out that DEF pension is unloading its ABC Company shares, though, and the GHI pension fund decides it also wants to buy the shares. It offers $15.125 per share and gets the trade. Company XYZ has been eighthed.
Why Does Eighthed Matter?
Being eighthed is the same as bidding one penny higher on the Price Is Right. As long as your bid oris better than the next guy's, the degree to which it is better is often irrelevant. This can often make the other bidder feel wronged, but this is the game.
Becauseno longer trade in eighths of a dollar (they now trade in decimal form, to the penny), this is rarely used, but when it is, it often refers to being undercut or outbid by tiny amounts.