Green shoe option is a cost of a secondary equity offering.

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A green shoe option is an over-allotment option granted to underwriters in an initial public offering (IPO) or follow-on offering. It allows the underwriters to sell more shares than the company initially offered, up to a certain limit. This option is typically exercised when there is strong demand for the shares and the underwriters believe they can sell them at a higher price than the offering price. The green shoe option is not a cost to the company, but rather a potential benefit as it allows the company to raise more capital if the demand for the shares is high.

Green Shoe Option Is a Cost of a Secondary Equity