Greenshoe option

(redirected from Overallotment Options)

Greenshoe option

 Option that allows the underwriter for a new issue to increase the size of the issue because of high demand for the shares.

Greenshoe Option

A provision in some underwriting contracts allowing the underwriter to sell more shares to investors than were originally agreed. In an underwriting agreement, the underwriter agrees with the issuer of a security to place a certain amount with investors. If demand for the security exceeds the underwriter's supply, the greenshoe option allows the underwriter to avoid a sudden jump in price by increasing supply. Normally, the greenshoe option allows the underwriter to increase supply up to 15%. It is important to note that not all underwriting contracts have greenshoe options, especially in situations in which the issue is for a limited project for which the issuer only needs a certain amount of capital. It is also called an overallotment option.
References in periodicals archive ?
6 million if the underwriters exercise their overallotment options in full), net of underwriting discounts and commissions.
Assured") (NYSE:AGO) today announced that the underwriters of its previously announced common share and equity unit offerings have exercised their overallotment options in full.
5% convertible shares has resulted in the lead managers exercising overallotment options of an additional 1,387,500 common shares and 450,000 convertible shares.
State Street Corporation (NYSE: STT) today announced that the underwriters have exercised their overallotment options to purchase an additional 933,000 shares of common stock, an additional 225,000 units of SPACES(SM), and an additional $45 million of floating-rate, medium-term capital securities, originally priced on January 14, 2003, for public sale.
4 million if the underwriters' overallotment options are exercised in full).
NYSE: CHH) today announced that the underwriters of the company's public offering of common stock exercised overallotment options to purchase an additional 1.
This amount includes 750,000 shares reserved for underwriters' overallotment options.
5 million shares, of American States Financial Corporation, which includes the overallotment options granted to the underwriters.
2 million shares of Cytec common stock have exercised approximately 80 percent of their overallotment options and purchased an additional 254,500 shares of Cytec common stock to cover short positions which they established during the offering.
as representative of the underwriters of the recent initial public offering, has informed the company that, pursuant to the prospectus used in connection with the initial public offering, the underwriters are exercising in full the overallotment options granted by the company and the Starkman Family Trust, as selling shareholder, to purchase an aggregate of 315,000 additional shares of common stock of the company, including 255,000 from the company and 60,000 from the selling shareholder.
If the underwriters of the public offering exercise their overallotment options, however, the decrease will be approximately 10.