📚 Stock Market Glossary
Clear, beginner-friendly explanations, real-world analogies, and visual formulas for key stock market terminology.
Block Deal
Trading & Market💡 Key Takeaway: A off-market transaction where a major shareholder sells a massive block of shares at a discount after market hours.
Bulk Wholesale Clearance Analogy: Selling an entire warehouse stock at a 7% discount to wholesale liquidators after store closing hours to avoid clogging regular checkout lines!
😎 10-Second Show-off Pro Tip for Friends!
😎 Show-off Tip: Say, 'A block deal priced at a 5% discount usually means immediate selling pressure at market open as hedge funds arbitrage the spread.'
📖 Beginner-Friendly Explanation
STEP 1
Core Concept & Meaning
A Block Deal is a privately negotiated off-hours transaction involving a massive volume of equities transferred between institutional counterparties.
STEP 2
Why It Matters & Mechanism
To prevent crushing open-market order books, major shareholders sell shares at a discount (typically 3–10% below closing price) before market open or after close:
- Short-Term Price Pressure: Discount pricing creates immediate downward arbitrage pressure when open-market trading resumes.
STEP 3
Practical Investment Tips & Pitfalls
- Overhang Resolution: If the sale resolves long-standing equity overhang from early investors, it can clear the path for long-term price recovery.
📊 Block deal short-term stock price impact formula
Block deal sale price = closing price of the day (KRW 100,000) × (1 - discount rate 7%) = KRW 93,000 transaction
▶ At the opening of the regular market, the discounted purchase price is around 93,000 won, exerting downward pressure on the stock price in the short term
▶ Resolving mid- to long-term supply and demand uncertainties when the overhang volume is exhausted
⚖️ Key Comparison at a Glance
| Category | Regular session intraday selling | Block deal (after-hours bulk trading) |
|---|---|---|
| Trading time | Regular stock market trading hours (09:00 - 15:30) | Before market opening (08:00–09:00) or after market closing |
| Transaction Price | Real-time quote execution price | Contract price discounted by 3–10% compared to closing price |
| Market Impact | Intraday selling bomb causes stock price to plummet | Block intraday direct hits by concluding all transactions outside of the scheduled time |
| Major players | General individual and institutional traders | Major shareholders, PEF, global hedge fund institutions |
⚔️ Don't Mix These Up! (Head-to-Head Comparison)
VSDark Pool
View Dark→💡 Crucial Difference: A block deal is an off-hours discounted transaction arranged directly between institutions, while a dark pool is an alternative private exchange hiding quotes.
📌 Practical Market & Real-World Example
Following news that a founder completed a block deal of a 5% stake at a 6% discount to institutional buyers, the stock opened 5% lower.