What is a Green-shoe Option?
A Green Shoe option allows the underwriter of a public offer to sell additional shares to the public if the demand is high.
Under a green shoe option, the issuing company has the option to allocate additional equity shares up to a specified amount.
A Green Shoe option allows the underwriter of a public offer to sell additional shares to the public if the demand is high.
The option is a clause in the underwriting agreement, which allows the company to sell additional shares, usually 15 per cent of the issue size (in case of IPO), to the public if the demand exceeds expectations and the stock trades above its offer price.
A Green Shoe option allows the underwriter of a public offer to sell additional shares to the public if the demand is high.
The option is a clause in the underwriting agreement, which allows the company to sell additional shares, usually 15 per cent of the issue size (in case of IPO), to the public if the demand exceeds expectations and the stock trades above its offer price.