Transferable put right

An option issued by the firm to its shareholders to sell the firm one share of its common stock at a fixed price (the strike price) within a stated period (the time to maturity). The put right is "transferable" because it can be traded in the capital markets.

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Transferable Option
A contract which permits a position in the option market to be offset by a transaction on the opposite side of the market in the same contract.

Put provision on bonds
A put provision grants the bondholder the right to sell the issue back to the issuer at par value on designated dates. Here the advantage to the investor is that if interest rates rise after the issue date, thereby reducing a bondís price, the investor can force the issuer to redeem the bond at par value.

Uncovered put
A short put option position in which the writer does not have a corresponding short stock position or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put. Also called "naked" puts, the writer has pledged to buy the stock at a certain price if the buyer of the options chooses to exercise it. The nature of uncovered options means the writer's risk is unlimited.

Throughput agreement
An agreement to put a specified amount of product per period through a particular facility. For example, an agreement to ship a specified amount of crude oil per period through a particular pipeline.

Put-call parity relationship
The relationship between the price of a put and the price of a call on the same underlying security with the same expiration date, which prevents arbitrage opportunities. Holding the stock and buying a put will deliver the exact payoff as buying one call and investing the present value (PV) of the exercise price. The call value equals C=S+P-PV(k).

Put swaption
A financial tool in which the buyer has the right, or option, to enter into a swap as a floatingrate payer. The writer of the swaption therefore becomes the floating-rate receiver/fixed-rate payer.

Put provision
Gives the holder of a floating-rate bond the right to redeem his note at par on the coupon payment date.

Put price
The price at which the asset will be sold if a put option is exercised. Also called the strike or exercise price of a put option.

Put option
This security gives investors the right to sell (or put) fixed number of shares at a fixed price within a given time frame. An investor, for example, might wish to have the right to sell shares of a stock at a certain price by a certain time in order to protect, or hedge, an existing investment.

Put bond
A bond that the holder may choose either to exchange for par value at some date or to extend for a given number of years.

Put an option
To exercise a put option.

Put
An option granting the right to sell the underlying futures contract. Opposite of a call.

Protective put buying strategy
A strategy that involves buying a put option on the underlying security that is held in a portfolio.

Poison put
A covenant allowing the bondholder to demand repayment in the event of a hostile merger.

Computer-Intergrated Manufacturing (CIM)
The intergration of computer control and monitoring into a manufacturing process.

Covered Put
A put option position in which the option writer also is short the corresponding stock or has deposited, in a cash account, cash or cash equivalents equal to the exercise of the option. This limits the option writer's risk because money or stock is already set aside. In the event that the holder of the put option decides to exercise the option, the writer's risk is more limited than it would be on an uncovered or naked put option.

Rights issue
An new share issue to existing shareholders giving them the right to buy new shares at a predetermined price.

Issuance of "rights" to current shareholders allowing them to purchase additional shares,usually at a discount to market price. Shareholders who do not exercise these rights are usually diluted by the offering. Rights are often transferable, allowing the holder to sell them on the open market to others who may wish to exercise them. Rights offerings are particularly common to c ...

With rights
Purchase of shares in which the buyer is entitled to the rights to buy shares in the company's rights issue.

Voting rights
The right to vote on matters that are put to a vote of security holders. For example the right to vote for directors.

Special drawing rights (SDR)
A form of international reserve assets, created by the IMF in 1967, whose value is based on a portfolio of widely used currencies.

Rights-on
Shares trading with rights attached to them.

Right
A short-lived (typically less than 90 days) call option for purchasing additional stock in a firm, issued by the firm to all its shareholders on a pro rata basis.

Property rights
Rights of individuals and companies to own and utilize property as they see fit and to receive the stream of income that their property generates.

Preemptive right
Common stockholder's right to anything of value distributed by the company.

Outright rate
Actual forward rate expressed in dollars per currency unit, or vice versa.

Liquidation rights
The rights of a firm's securityholders in the event the firm liquidates.

Cum rights
With rights.

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Did you know?

Tax free acquisition

A merger or consolidation in which (a) the acquirer's tax basis in each asset whose ownership is transferred in the transaction is generally the same as the acquiree's, and (b) each seller who receives only stock does not have to pay any tax on the gain he realizes until the shares are sold.


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