The Law Dictionary

Your Free Online Legal Dictionary • Featuring Black’s Law Dictionary, 2nd Ed.

EMBEDDED OPTION Definition & Legal Meaning

Definition & Citations:

Provision giving a party specific rights to take specific actions under specific conditions as a part of an agreement. Examples in the bond market are a ‘callable bond’ and a ‘putable bond,. The callable bond has an embedded option allowing the issuer to redeem the bond before its stated maturity date. In contrast, the putable bond allows its holder to redeem early. Known also as embeddo.


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