Putable Common Stock

Putable common stock is stock that gives investors the option to sell (or "put") the stock back to the company at a predetermined price.

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 put option acts merely as a type of insurance in the event the price falls significantly. Investors will often sell when the stock price falls below the predetermined price. The put option makes the stock more attractive to investors, facilitating the raising of capital by the issuing company.

Companies may also issue callable common stock, which allows them to buy back stock at a predetermined price. This allows the company to budget for buybacks more effectively.