Put frequency
Put frequency refers to the schedule or frequency at which bondholders have the option to exercise a put option, allowing them to sell the bond back to the issuer at a predetermined price. The put frequency determines when bondholders can choose to sell their bonds before maturity. It provides flexibility to bondholders by allowing them to potentially exit their investment under certain conditions or at specific intervals.
Possible values:
- Quarterly
- Semi-annual
- Annual
- Continuously
- Discrete
- Pays at maturity
- On effective payment date
- Every coupon
- Every 2 years
Continuously
In a continuously put frequency scenario, the bondholder can exercise the put option at any point in time, not just on specific dates. This offers even greater flexibility than daily put frequency, as the investor can sell back the bond at any moment.
Discrete
A discrete put frequency means that the bondholder can only exercise the put option on specific predetermined dates. This provides less flexibility compared to daily or continuous put frequencies but still offers scheduled opportunities for the investor to sell back the bond.
Every coupon
With an every coupon put frequency, the bondholder can exercise the put option each time a coupon payment is made. This allows the investor to potentially sell back the bond more frequently, typically semi-annually or quarterly, depending on the bond's coupon payment schedule.
On effective payment date
This put frequency allows the bondholder to sell back the bond only on the effective payment date, which is usually the maturity date of the bond. Investors have a single opportunity to exercise the put option at the end of the bond's term.
Annual
An annual put frequency permits the bondholder to sell back the bond to the issuer once a year. This provides a regular opportunity for the investor to exit the investment annually, offering a balance between flexibility and predictability in exercising the put option.