Often referred to as the 'green shoe'. An amount of shares, generally no greater than 15% of the orignal shares issued, that is reserved for issuance at the underwriters option at the original price. This is used by the underwriter to cover some, if not all, of the short position the brokerage firm(s) may have created in pursuit of maintaining a stable market by meeting aftermarket demand once the stock has begun to trade. The shares get issued at the IPO price which goes to the issuer, less fees. The difference between the IPO price and the price the firm sold those shares to the aftermarket buyers goes to the underwriter.