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Kostak means you are selling your IPO applications in the Grey market. The price you will get is for the application so it's also called “ Application Price”. Kostak is not related to allotment in terms of the seller. Once you have sold your application, you have booked your profit without trying your luck for getting the allotment. This is a safe and secure way to get fixed profits in IPO Grey Market. Let's understand it with an example;
Case1: If your application shows allotment status as “Not Allotted”, then in normal scenario, you have not get any profit. But if you had already sold the application at Kostak Price, so you will get the fixed Kostak amount.
Case2: If your application shows allotment status as “ Allotted”, then in a normal scenario, you must have gotten some profit if IPO listed above the base price. But if you had already sold the application at Kostak Price, you need to pay the difference of Total Profit- Kostak Price to the application Buyer.
As Kostak Price is an Application Price, so the rates are very low. Good for the large investors who have many applications and don’t want to take listing day risk.
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Zerodha Trade@20
