are you saying that the greenshoe exercise has a predictable effect on the stock price? i think that in a deal that starts trading at more than doulbe the offering price, it's clear on day one that it's oversubscribed and the over-allotments are going to be exercised - the over-allotment allocation is a mechanical process, since the order book has been built prior to the strat of trading - the over-allotment option is a standard provision - so i am not sure exactly what is the logic for your suggestion, perhaps you can explain a bit more.
again, not sure what you are getting at here - this deal is a standard ipo just like many others done every day - it's standard practice for the underwriter to make a market it the stock they underwrite - it's standard practice for the banks to get paid in shares if the client company has no cash - does this prevent a deal from tanking? no, there are deals that perform well and there are deals that tank, every day, regardless of whether the underwriting banks get paid in cash or stock... the banks do get stuck with underwater stock on their books.. happens all the time - no matter how much a bank wants to prop the price with their own capital, the market will ultimately decide the value.
reply to the above "the market will ultimately decide its value" you are 100% correct but should have highlighted ultimatelly. As for now the thieves in white shoes decide what the price should be. don't forget to remind us that there is a chinese wall between the research department and trading department. ome more thing there are no preferred customers
Just to clarify, you are not making anymore money than you would of if you had a natural short at $122. Shorting against the box just locks in your profits, while delaying the gains for tax purposes. IF the stock tanks you are losing on your long but gaing on your short and vice versa. If they big guys did do this, look for them to cover size in JAN.