DEFINITION of 'Rights'

A security giving stockholders entitlement to purchase new shares issued by the corporation at a predetermined price (normally at a discount to the current market price) in proportion to the number of shares already owned. Rights are issued only for a short period of time, after which they expire.

Also known as "subscription rights" or "share purchase rights."


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Rights can and do trade independently of the underlying stock on an exchange. Similar to options, the price of a right is determined by a number of factors, such as its subscription price, the underlying stock price, its volatility, interest rates and time to expiration. The intrinsic or theoretical value of a right during the cum rights period - when the stock trades with the rights attached - is different from the value of a right during the ex-rights period, when it trades independently.

  1. Share Purchase Rights

    A type of security that gives the holder the option, but not ...
  2. Cum Rights

    A shareholder of record that qualifies for a rights offering ...
  3. Distribution

    1. When trading volume is higher than that of the previous day ...
  4. Rights Offering

    An issue of rights to a company's existing shareholders that ...
  5. XRT

    A notation on a ticker tape that is used to indicate that a security ...
  6. Ex-Rights

    Shares of stock that are trading but no longer have rights attached ...
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