Sumary of Grey Market Premium – The Secret to IPO Investing Success?:
- ) One aspect of this IPO punting business that really gets people going has to do with what’s happening “outside” the legit markets.
- It is here, at least in some portion, that the IPO punters get their kicks.
- In the context of IPOs, the grey market is where unlisted IPO shares are traded.
- And the grey market premium or GMP is the amount, over and above the issue price, that traders are willing to pay or ask for to trade these yet to be listed IPO shares.
- The company offers a single share at ₹100. The price at which the company offers its shares is called issue price.
- You will have to pay, Issue price + GMP = 100 + 50 ⇒ ₹150 per share.
- You see, it is assumed that the grey market “knows” what’s about to happen on listing day.
- So, if you thought you needed to wait for listing day to figure out what’s about to happen…well, you are not a true-blue IPO punter, yet.