• Uber underwriters deployed an unusual tactic, known as a 'naked short,' to provide extra support for  the stock ahead of the IPO, four people with knowledge of the move said.

• The move allows underwriters to sell shares in excess of the so-called greenshoe and then buy them back in the open market to provide even more firepower in the event there is significant selling pressure.

• The technique shares the same name as a practice that was outlawed during the financial crisis of 2008, but is legal and Uber's prospectus warned it was a possibility.

Uber's underwriters, led by Morgan Stanley, were so worried the company's initial public offering had run into trouble, they deployed a nuclear option ahead of the deal last week, so they could provide extra support for the stock, four people with knowledge of the move said.

This level of support, known as a "naked short," is a technique that goes above and beyond the traditional help a new offering can get.

In every deal, there's an over-allotment, which allows the underwriters to sell 115 percent of the available offering to investors, effectively opening a short position. The excess 15 percent can be purchased by the underwriters in the open market — covering the short position — to support the stock if it goes down. More colloquially, this is known as the "greenshoe."

But in rare cases, bankers will use a strategy called a "naked short," which allows underwriters to sell shares in excess of that greenshoe portion and then buy them back in the open market to provide even more firepower in the event there is significant selling pressure.

Some of the bankers tried to console market participants prior to the opening of trading by telling them that there would be additional support from the naked short, said one of the people, who asked not to be named discussing private conversations. The exact size of the naked short could not be learned, but it is expected to have been "fairly small," two of the other people said.

Not successful

The efforts didn't stop Uber from falling 18 percent in its first two days of trading as heavy trading volume ate away at the banks' ability to support the stock price. Shares of Uber UBER  were higher by 2% as of midday on Tuesday.

The requirements of the naked short are that the underwriters must close out their position by purchasing shares in the open market. The mechanism is quite uncommon, used in a small fraction of deals, given that it can be risky for the banks if the stock price does indeed go up and they are short. It's also typically reserved for larger deals because the banks need enough liquidity to take on the extra risk.