USING EXCHANGE‐TRADED EQUITY FLEX PUT OPTIONS IN CORPORATE STOCK REPURCHASE PROGRAMS

James Angel (), Gary L. Gastineau and Clifford J. Weber

Journal of Applied Corporate Finance, 1997, vol. 10, issue 1, 109-113

Abstract: Casual evidence suggests that as many as 10% of the companies repurchasing their stock over the past decade have used the sale of puts on the company's stock as part of the repurchase program. This article describes a new instrument for such corporate stock buybacks recently introduced by the American Stock Exchange: Equity Flex puts on the issuer's stock. When and if the puts are exercised, the company's shares are retired—often on better terms and with better cash flow timing than the company could achieve with a conventional stock repurchase program. To date, such stock repurchase programs have been conducted primarily using over‐the‐counter put options. The new Equity Flex puts promise to eliminate the relative advantages of OTC transactions and offer stock repurchasers better pricing and increased liquidity. Use of exchange markets can also help overcome any reluctance a financial officer might have to rely on prices offered by a single dealer.

Date: 1997
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1111/j.1745-6622.1997.tb00131.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jacrfn:v:10:y:1997:i:1:p:109-113

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1078-1196

Access Statistics for this article

Journal of Applied Corporate Finance is currently edited by Donald H. Chew Jr.

More articles in Journal of Applied Corporate Finance from Morgan Stanley
Bibliographic data for series maintained by Wiley Content Delivery ().