Putable Common Stock

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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.

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RELATED FAQS
  1. Can I make money using put options when prices are going up?

    It seems counterintuitive that you would be able to profit from an increase in the price of an underlying asset by using ... Read Full Answer >>
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    Purchasing a put option and entering into a short sale transaction are the two most common ways for traders to profit when ... Read Full Answer >>
  3. How is a put option exercised?

    A put option is a contract that gives the option holder the right, but not obligation, to sell a set amount of shares (1 ... Read Full Answer >>
  4. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  5. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
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