{"id":363230,"date":"2026-05-20T14:43:41","date_gmt":"2026-05-20T09:13:41","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=363230"},"modified":"2026-05-20T14:43:41","modified_gmt":"2026-05-20T09:13:41","slug":"greenshoe-option","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/greenshoe-option\/","title":{"rendered":"Greenshoe Option"},"content":{"rendered":"<div>\n<div class=\"content-box-green\">\n<p><strong>News:<\/strong> The Food Corporation of India (FCI) is set to raise short-term debt of \u20b950,000 crore from scheduled banks for a three-month tenure, with a green shoe option to mop up an additional \u20b925,000 crore.<\/p>\n<\/div>\n<h2 class=\"red-h2-box\"><strong>About Greenshoe Option<\/strong><\/h2>\n<div>\n<dl id=\"attachment_363231\">\n<dt>\n<p><figure style=\"width: 340px\" class=\"wp-caption aligncenter\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2026\/05\/greenshoe-final-4d1acc3a634849f481f90f5a67862312.png?resize=340%2C188&#038;ssl=1\" alt=\"Greenshoe Option\" width=\"340\" height=\"188\" \/><figcaption class=\"wp-caption-text\">Source: Investopedia<\/figcaption><\/figure><\/dt>\n<\/dl>\n<\/div>\n<\/div>\n<ul>\n<li>A <strong>green shoe option<\/strong> is a <strong>clause contained in the underwriting agreement of an IPO.<\/strong><\/li>\n<li>This option permits the <strong>underwriters to buy up to an additional 15% of the shares at the offer price<\/strong> if public demand for the shares exceeds expectations and the shares trade above their offering price.<\/li>\n<li>It is also known as<strong> an over-allotment provision. <\/strong><\/li>\n<li><strong>Introduction in India: <\/strong>In India, the concept of green shoe option was introduced by the Securities and Exchange Board of India<strong> (SEBI) <\/strong>in the year<strong> 2003<\/strong> to <strong>stabilize the aftermarket price of shares<\/strong> issued in IPOs.<\/li>\n<li><strong>Working mechanism:<\/strong>\n<ul>\n<li>It is primarily <strong>used at the time of IPO or listing of any stock<\/strong> to ensure a successful opening price.<\/li>\n<li>Accordingly, <strong>companies can intervene in the market to stabilise share prices<\/strong> during the first 30-day time window immediately after listing.\n<ul>\n<li>This involves the <strong>purchase of equity shares from the market by the underwriting syndicate<\/strong> in case the share price falls below the issue price or goes significantly above the issue price.<\/li>\n<\/ul>\n<\/li>\n<li><strong>It acts as a price-stabilizing mechanism:<\/strong> It is considered to be <strong>good from the investor\u2019s point of view<\/strong> as those <strong>companies<\/strong> which have a green shoe option in their IPO process have a <strong>built-in price stabilising mechanism<\/strong>, which will ensure the prices will not go below their offer price.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News: The Food Corporation of India (FCI) is set to raise short-term debt of \u20b950,000 crore from scheduled banks for a three-month tenure, with a green shoe option to mop up an additional \u20b925,000 crore. About Greenshoe Option A green shoe option is a clause contained in the underwriting agreement of an IPO. This option&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/greenshoe-option\/\">Continue reading <span class=\"screen-reader-text\">Greenshoe Option<\/span><\/a><\/p>\n","protected":false},"author":10366,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,12039],"tags":[11872,10498],"class_list":["post-363230","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-knolls","tag-9pm-daily-factly","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/363230","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10366"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=363230"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/363230\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=363230"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=363230"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=363230"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}