An option that is a structured part of another instrument, (such as bank loan,...
An option that is part of another security. It does not trade by itself, but it does affect the value of the security of which forms a part.... more on: Embedded option
An option, often an interest rate option, embedded in a debt instrument that affects its redemption. Examples include mortgage-backed securities and callable and puttable bonds.
A provision in a financial contract or financial instrument, such as a loan or a security, that allows one party to change the timing or amount of one or more cash flows associated with that contract or instrument. An options feature of minor importance in bank products or debt instruments. Sometimes called a hidden option. They are "hidden" not because they are in any way secret but because they are not separate, detachable features that banks or customers can add or subtract to customize individual transactions. Instead, they are one of a number of features, terms, or contract rights that are embedded in the contract or financial instrument. Examples include prepayment options on loans, early withdrawal options on certificates of deposit, annual and lifetime rate caps on ARMs, and call options in bonds. Embedded options make both the projected return and the interest rate risk of a financial instrument difficult to evaluate because the probability that the option will be exercised must be evaluated, and may vary with movements in rates. See embedded derivative instrument, option, and option risk.
Is an option whose characteristics are implied but not explicitly specified. One notable example is the option granted a mortgagor (home owner) by the lender. The mortgagor has the right to prepay the mortgage at any time but is not required to do so in any specified manner.
an option, often an interest rate option, embedded in a debt instrument that affects its redemption. Embedded options are usually, but not always, interest rate options; some are linked to the price of an equity index (eg, Nikkei 225 puts embedded in Nikkei-linked bonds) or a commodity (usually gold, but sometimes oil). Embedded options may be embedded in physical commodity contracts or commodity derivatives such as extendible swaps.
An option that is part of the structure of a bond that provides either the bondholder or issuer the right to take some action against the other party, as opposed to a bare option, which trades separately from any underlying security.
a statement within the bond structure that would alter the interest rate earned by the bond.