What is Grey Market Premium: Is it worth the hype?

0
273

Grey market means unofficial trading of securities. Broadly, before trading begins on a particular day, the securities that are bought and sold in a market refer to a grey market. In addition, it can also include the exchange of export and imported goods. You might come up with a doubt- whether this is like a black market? Well no, there’s nothing illegal about this market. It has been considered a  legal transaction. Are you interested in earning a Grey Market premium? Well, without further ado, we’ll share the details with you.

About Grey Market 

Imagine a market where the shares of different companies are being sold by people who aren’t the owners of those companies per se. Does it sound like a stock market? Well, similar but this is an alternate type of market since it involves no market regulation. The regulators of the market do not intervene in this trading. Such a market is known as a Grey Market. It’s popularly known as the unofficial or parallel trading of stocks.

Often companies also sell their stocks in this market for biding before their official transaction day begins. Therefore, you can trust this type of market even as a newbie. Usually, these are managed by like-minded individuals who run this business based on their experience and earning consumer trust.

Grey Market Premium

The Grey Market Premium is the price at which stocks are being traded in the market. You might wonder how that’s different from a stock price? Well, before the company issues the trade in the IPO, it’s sold in the grey market. This helps the investors to realize whether a certain IPO will work or not before the listing occurs. We can give an example. Suppose a person has bought shares of a company at a particular issue price before IPO is released.

However, people working in the grey market contact this person and assure him/her that the value is higher than the issue price of the stock. So, they will sell it at a higher price than the issue price. If the person is convinced then he/she will share the stock in the grey market before the official listing is released. The entire transaction is based on a trust that works both ways. The reason why it’s referred to as an unofficial market. There’s an advantage that you’ll be aware beforehand of how a particular stock is going to perform before the listing day arrives.

Risks

If we are taking the commodity trade into consideration, then there’s definitely a huge risk involved. As customers may get degrading quality of the products. There have also been huge complaints registered. If we consider stocks, that includes risk as well. Rather than valuing stocks through the social media hype, we would recommend you to look at the market figures first. This will help you to calculate from all arenas before selling the stocks in the grey market premium. That being said, there are several IPO’s coming up, you should check them out!

LEAVE A REPLY

Please enter your comment!
Please enter your name here