Grey Market Premium: The Insider's Guide · Chapter 8 of 10
GMP in Your IPO Strategy
Use it as one input
Combine GMP with valuation, subscription, promoter selling and market conditions, never on its own.
Set rules in advance
Write down the minimum GMP, subscription and valuation you want before you apply. Rules made in advance protect you from excitement and from fear of missing out.
Know when to skip
A rich valuation with a falling GMP is a reasonable reason to skip an issue. A rising GMP on an overpriced issue is not a reason to apply.
Selling plans
If you apply for listing gain, decide in advance whether to sell at the open, at a target price or at a fixed time. If you apply for ownership, treat GMP as noise.
Key takeaways
- Use GMP alongside other checks.
- Decide rules before the issue opens.
- Skipping is a valid strategy.
- Make your selling plan before listing day.