Used in the context of general equities. Sizable block of securities or commodities contracts that, if released on the market, would put downward pressure on prices; prohibits buying activity that would otherwise translate into upward price movement. Examples include shares held in a dealer's inventory, a large institutional holding, a secondary distribution still in registration, and a large commodity position about to be liquidated.
The number of stock options issued to employees, plus the number of stock options that could still be issued, divided by the total number of shares outstanding. Overhang puts downward pressure on stock prices that can be countered by the effect of employee ownership. These plans are a common way in which a shareholders' ownership can significantly be diluted. See also dilution.