Also known as green shoe option. The option granted to the underwriters of a registered offering or the initial purchasers of a private placement to purchase additional securities with identical terms after the initial closing of an issuance of securities. This option is granted in the underwriting agreement by the company issuing the securities, or in the case of a registered offering, either by the company or the selling stockholder. The name "green shoe" is derived from the fact that the over-allotment option mechanism was first used in a public offering by The Green Shoe Company.

For more information, see these Standard Documents: