Putable Common Stock

DEFINITION of 'Putable Common Stock'

Common stock that gives investors the option to put the stock back to the company at a predetermined price.

Also known as a "putable swap".

BREAKING DOWN 'Putable Common Stock'

With putable common stock, investors have the option of selling their shares back to the issuer at a predetermined price. Typically, this price is relatively low, so the option to put acts merely as a type of insurance for investors, sweetening the security.

RELATED TERMS
  1. Putable Swap

    An exchange of cash flows in which one counterparty makes payments ...
  2. Liquid Yield Option Note - LYON

    A zero coupon bond that is callable (by issuer), putable (by ...
  3. Share Purchase Rights

    A type of security that gives the holder the option, but not ...
  4. Stock Option

    A privilege, sold by one party to another, that gives the buyer ...
  5. Callable Swap

    An exchange of cash flows in which one counterparty makes payments ...
  6. Stock Swap

    The exchange of one asset for another. A stock swap occurs when ...
Related Articles
  1. Managing Wealth

    Guide To Embedded Options In Bonds

    Investors should be aware of embedded options that may be available in certain securities as these options may affect the value of the security.
  2. Trading

    How To Sell Put Options To Benefit In Any Market

    As long as the underlying stocks are of companies you are happy to own, put selling can be a lucrative strategy.
  3. Trading

    Three Ways to Profit Using Put Options

    A brief overview of how to profit from using put options in your portfolio.
  4. Investing

    Types of Options

    There are many different types of options. In addition to general put options and call option, we will discuss 13 different types of options. Some of these option types are better suited to day ...
  5. Trading

    5 Equity Derivatives And How They Work

    These derivatives allow investors to transfer risk, but there are many choices and factors that investors must weigh before buying in.
  6. Trading

    Stock Options: What's Price Got To Do With It?

    A thorough understanding of risk is essential in options trading. So is knowing the factors that affect option price.
  7. Trading

    Bear Put Spreads: A Roaring Alternative To Short Selling

    This strategy allows you to stop chasing losses when you're feeling bearish.
  8. Investing

    Getting Acquainted With Options Trading

    Learn more about stock options, including some basic terminology and the source of profits.
  9. Investing

    The Basics Of Option Price

    Options can be an excellent addition to a portfolio. Find out how to get started.
  10. Trading

    Introduction - Day Trading and Options

    Options have not been a tradition part of day-trading strategy, but this is quickly changing.
RELATED FAQS
  1. Do you have to be an expert investor to trade put options?

    Learn about investing in put options and the associated risks. Explore how options can provide risk, which is precisely defined ... Read Answer >>
  2. Are put options more difficult to trade than call options?

    Learn about the difficulty of trading both call and put options. Explore how put options earn profits with underlying assets ... Read Answer >>
  3. When is a put option considered to be "in the money"?

    Learn about put options, what they are, how these financial derivatives operate and when put options are considered to be ... Read Answer >>
  4. A 10-year, 8% coupon bond is currently trading at 98.5 of par ...

    Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >>
  5. How do I set a strike price in a put?

    Learn about put options, considerations to make before you select strike prices and how to select strike prices for your ... Read Answer >>
  6. What is the difference between "right" and "obligation" on a call option?

    Learn what a call option is, what determines a buyer and seller of an option, and what the difference between a right and ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center