Embedded option

1.

A provision in a debt security which allows the issuer or the holder to exercise an option - this is generally a call option (issuer) or a put option (holder).

The option is generally linked to specific dates and may be subject to other conditions.

2.

A provision in a debt security which links payments on the security to pre-specified changes in an underlying security, currency, index or commodity.

See also

• Call option
• Put option