Stocks with embedded derivative options can be 'callable' or 'putable,' and they are not as widely available. A 'callable' stock has the option of being purchased back by the company at a specific price at a specific time. A 'putable' stock, on the other hand, allows its holder to sell it to the company at a set price and time.

Stocks with embedded derivative options are securities that include built-in derivative features, offering additional flexibility or benefits beyond standard equity ownership. Examples include convertible bonds, which can be exchanged for a predetermined number of shares, or warrants, which grant the right to buy stock at a fixed price. These hybrid instruments combine equity exposure with derivative-like characteristics, allowing investors to benefit from potential upside while limiting downside risk. Companies often issue such securities to raise capital more attractively, as they provide investors with conversion or exercise opportunities. However, these instruments can be complex, requiring careful analysis of terms like conversion ratios, expiration dates, and strike prices. Investors should assess their risk tolerance and market outlook before trading stocks with embedded derivatives.