Nifty 50
Sensex
US Tech 100
Dow Jones
FTSE
Dax
CAC
Nikkei 225
Hang Seng
SSE Composite
TAIEX
KOSPI
Gift Nifty
Strategy Indices
Broad Market Indices
Sectoral Indices
Thematic Indices
Home
Finance GlossaryOver-Allotment Option
Over-Allotment Option
Definition of Over-Allotment Option
An Over-Allotment Option, often referred to as a Greenshoe option in the Indian primary market, gives the underwriters the right to sell more shares (usually 15%) over and above the original IPO size if there is strong demand. If the share price drops below the issue price, the underwriters can use the proceeds from the extra shares to repurchase shares in the open market for support. If the price goes up, they exercise the option and sell the extra shares to the market. This mechanism is regulated by SEBI in India, and the primary purpose is price stabilisation.
Related Terms
Cash Conversion Cycle
A Cash Conversion Cycle (CCC) tells you how many days it will take to convert a company’s inventory or resources into cash. The formula for Cash Conversion Cycle is:
Cash Conversion Cycle = (DIO + DSO) – DPO
Cash Conversion Cycle = (DIO + DSO) – DPO
- DIO: Days Inventory Outstanding is the average number of days it takes for a company to turn inventory into cash through sales
- DSO: Days Sales Outstanding is the average number of days it takes for a company to collect its receivables
- DPO: Days Payable Outstanding is the average number of days it takes fo a company to fulfil its obligations or payables
Bottom Line in Finance
Bottom line in finance is used to refer to a company’s crucial metrics like earnings, profits, net profits, earnings per share (EPS), and others.
Any move or action that can impact a company’s profit or net profit in a positive or negative direction is also referred to as the bottom line.
“Bottom line” is called such because the crucial metrics of a company are generally found at the bottom of a financial statement.
Any move or action that can impact a company’s profit or net profit in a positive or negative direction is also referred to as the bottom line.
“Bottom line” is called such because the crucial metrics of a company are generally found at the bottom of a financial statement.
Dividend Per Share
Dividend per share indicates the amount of dividends paid as a ratio of the number of shares outstanding. Or, dividend per share could also refer to the product of earnings per share and dividend payout ratio.
Thus, the formula to calculate dividend per share is:
DPS: Total dividend amount / Number of shares outstanding
Or
DPS: Earnings Per Share x Dividend Payout Ratio
An investor can determine how much dividends they stand to earn for each share they own by calculating dividends per share.
Thus, the formula to calculate dividend per share is:
DPS: Total dividend amount / Number of shares outstanding
Or
DPS: Earnings Per Share x Dividend Payout Ratio
An investor can determine how much dividends they stand to earn for each share they own by calculating dividends per share.
Firm Allotment
Firm Allotment is the process of allocating shares during an IPO to investors who are not considered to be retail public investors. The firm allotment is done as per SEBI guidelines, which dictate that a portion of the IPO can be allocated to the likes of Mutual Funds, regular employees (permanent), and others.
The complete list of firm allotments for investors by allocation is as follows.
The complete list of firm allotments for investors by allocation is as follows.
- Foreign Institutional Investors (FIIs): 30%
- Development Financial Institutions (DFIs): 20%
- Mutual Funds: 20%
- Regular Employees (permanent): 10%
- Employee of Promoting Company: 10%
- Lead Bankers: 5%
Any leftover percentage can be allocated to promoters.
Morning Star Pattern
The Morning Star Pattern is a three-candle bullish formation that appears after a decline and suggests a shift in market momentum. It begins with a clear bearish move, followed by a phase of indecision, and ends with a strong bullish candle. Traders often view this pattern as an early signal of renewed buying interest.
Open Interest
Open Interest is created when a new seller and a new buyer enter into a fresh contract. It represents the total number of active futures or options contracts that are still open and not squared off on an exchange like the NSE. Open Interest helps traders understand market participation, liquidity, and sentiment in stocks or indices such as the Nifty. Rising Open Interest with rising prices indicates bullish strength, while rising Open Interest with falling prices signals bearish sentiment.
Invest & Trade with a Trading
Platform That's #MadeForTrade
Open your Dhan Account in minutes!
