A greenshoe is an overallotment option that occurs during an IPO. A greenshoe or overallotment agreement allows underwriters to sell additional shares than the company originally intended. This generally occurs when investor demand is particularly high—higher than originally expected. Greenshoe options allow underwriters to flatten out any fluctuations and stabilize prices. Underwriters are able to sell as much as 15% more shares up to 30 days after the initial public offering in case demand increases.