4 ms·
This is the greenshoe option at work: When the price is determined, the shares are ready to publicly trade. The underwriter has to ensure that these shares do
by state_machine 14y ago
This is the greenshoe option at work:
When the price is determined, the shares are ready to publicly trade. The underwriter has to ensure that these shares do not trade below the offering price.
If the underwriter finds there is a possibility of the shares trading below the offering price, they can exercise the greenshoe option.
http://www.investopedia.com/articles/optioninvestor/08/greenshoe-option-ipo.asp#ixzz1vFsh1DfT http://www.investopedia.com/articles/optioninvestor/08/green...
- AndyIngram 14y agoNo its not. Over allotments are to stabilize the lack of sellers above the offering price and to raise additional capital for the issuer. It could be a reason for the price returning to $38 but most likely that was not why either. The buys at $38 can be explained by other factors like orders from people or funds who did not get all or any of their requested allotments and had resting orders at 38. Overall the markets are skittish and the price range is high based on current earnings but there is so much potential future earnings, I think we will see much higher prices if not right away some time in 2013.
- squeee 14y agoSo... get short on FB?
- AndyIngram 14y agoThat's your choice.
- gdubs 14y agoUgh. What is it about finance that I find so hard to grok... So, essentially they're able to offer more shares than they originally agreed to, correct? Where do those extra shares come from, and how exactly does that help keep the price above water?