Tick Size

What is tick size?

Tick size is the minimum permitted increment for a quote or order in a security. A penny grid contains prices such as $25.00, $25.01 and $25.02, and a half-cent grid also includes $25.005. The product and its rules define the grid, so stocks, options and futures each follow their own increments.

Tick size vs bid-ask spread

The bid-ask spread is the distance between the quoted bid and offer, expressed in dollars or ticks. Tick size is the spacing between permitted prices, so a spread can equal one tick or span several.

Tick size rules for U.S. stocks under Rule 612

Under today’s Rule 612 framework, NMS stock quotes and orders priced at $1 or higher use increments of at least $0.01. Below $1, the regulatory floor is $0.0001, and each venue’s rules set which increments it accepts within those limits.

The adopted amendment assigns a $0.005 increment to qualifying narrow-spread stocks. The SEC's exemption extends its compliance date to the first business day of November 2027.

Rule 612 regulates accepting, ranking and displaying quotes and orders, so executions can print at finer prices, including qualifying price improvement. A $25.003 limit order on a stock above $1 is refused at entry; a sub-penny fill from price improvement stands.

Tick value for shares, options and futures

For shares, multiply the tick by quantity. For options and futures, also apply the contract’s premium or price multiplier. Options exchanges set separate increments for single-leg and complex orders, so check the product rules before you price a spread.

Read the bid, ask and midpoint alongside available market depth. Use the intended entry premium in the options profit calculator to connect one price step with the position’s cash flow and payoff.

Limitations of tick size

• Read the spread in ticks before the order. The $0.01 grid sets the spacing between prices; the book sets how many ticks the spread spans, from one to several.
• Check the increment for the product and price level. NMS stocks quote in at least $0.01 at $1 or higher, with a $0.0001 floor below $1, while options and futures follow their own product rules.
• Expect fills between the ticks. Rule 612 governs quotes and orders, so permitted executions, including qualifying price improvement, can print at finer prices.
• Count ticks between quoted prices, which sit on the grid; a sub-penny fill sits between ticks.
• Plan for the half-cent grid. The adopted $0.005 increment for qualifying stocks has a compliance date of the first business day of November 2027.

Bottom line

Tick size is the price grid every quote and order must sit on, and it turns price changes into countable steps. Confirm the increment for the product and price level, convert ticks to dollars with quantity and any contract multiplier, and track the November 2027 half-cent compliance date for qualifying stocks.