A lock-up agreement prevents insiders, pre-IPO investors, and early shareholders from selling for a set period — typically 90 to 180 days after an IPO or SPAC merger. When it expires, those shares flood into the float overnight.
The market often ignores the lock-up until two weeks before expiration. Then it panics. The actual selling is usually front-run by hedgers and back-run by algos, which means the real move happens before and after the headline date.
How to find the date
The lock-up period is disclosed in the S-1 or proxy statement under 'Shares Eligible for Future Sale' or 'Lock-Up Agreements'. The exact expiration date is usually X days after the closing of the merger or IPO.
For SPACs, the lock-up often expires on the later of (a) one year from closing or (b) the date the stock trades above a threshold (e.g., $12) for 20 out of 30 days. Read the proxy — these terms vary.
Sizing the overhang
Multiply the locked shares by the current price to get dollar terms. A $200M overhang on a $50M daily volume stock is a 4-day supply dump if everyone sells at once. They won't — but the fear that they might is what drives the pre-expiration drift.
Trading it
Short two to three weeks before expiration, cover the day after. The headline is the exit, not the entry. If the stock rips into expiration on 'short squeeze' chatter, that's often the best short entry of the cycle.
Post-expiration, if the stock holds and volume doesn't spike, it means holders aren't selling — that's actually bullish. Cover immediately.