A promoter wants to sell 5% of a hospital company, 2.5 crore shares at Rs 600 with daily volume of 30 lakh shares. An overnight block at a 4% discount, or selling 25% of daily volume for about 33 days with an expected 3% impact and 2% daily volatility. Which would you advise?

Advise the block: it costs Rs 60 crore for certain, while the dribble costs an expected Rs 45 crore but with a one standard deviation band of about Rs 100 crore either way. Over 33 days at 2% daily volatility the average price can easily move 6.7%, so the Rs 15 crore of expected saving is small against the risk, and there is about a 44% chance the dribble ends worse than the block. The block also keeps the sale off the tape for 33 days.

The stake is worth Rs 1,500 crore at Rs 600. The block sells at Rs 576, proceeds Rs 1,440 crore, a cost of Rs 60 crore that the promoter knows before signing; the dribble is expected to average Rs 582, proceeds Rs 1,455 crore, a cost of Rs 45 crore. On the expected numbers the dribble saves Rs 15 crore, one per cent of the stake. Selling a house is the same choice: a cash buyer today at 4% below the asking price, or listing it for six weeks and probably getting 3% below, if the market holds while you wait.

Price it, because the promoter will not. With 2% daily volatility, the average price over 33 days of even selling has a standard deviation of about 2% times the square root of 33 over 3, 6.7%, which on Rs 1,500 crore is about Rs 100 crore. The square root of days over three, rather than days, is because an average of prices along a path moves less than the last price; the end price alone has a standard deviation of 11.5%. So the dribble's expected saving of Rs 15 crore comes with a one standard deviation band from -9.7% to +3.7%, Rs -145 crore to Rs +55 crore. The block's minus 4% sits 0.15 standard deviations below the dribble's mean, so the dribble ends worse than the block about 44% of the time.

That a promoter selling every day for 33 days is a story the market will read, and the 3% impact estimate assumes nobody reads it. Insider disclosure rules mean the sale becomes public as it proceeds; confirm the current thresholds, but the direction is clear: a known seller invites others to sell ahead and bid lower. A block tradeA sale of a large stake to institutional investors arranged after the market closes, usually at a discount to the closing price, and completed before it opens. is done before anyone can react, and the 4% is partly the price of that silence. The block's cost also depends on the desk's judgement: a 5% stake is 8.3 days of volume, which is large but placeable, and the discount could be negotiated down if demand is strong. Ask the desk for a wall-crossed read of demand before accepting the 4%.

Close with the advice and its limit. Take the block, or a block for most of the stake and a short dribble for the remainder if the desk's demand read is thin. The limit is the model: the one standard deviation band assumes the price moves randomly with no trend, and that the promoter is indifferent to risk. A promoter who needs exactly Rs 1,440 crore on a date for the other business has an even stronger reason to take the certain route; one with no deadline and a view that the stock is going up might rationally wait, but that is a trading view, not an execution choice.