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I read the article Understanding Rights Issues, but I don't understand how the selling of those rights issues works in practice.

Do you simply get call options you can sell on an options exchange? Or is there a special exchange where such rights issues are traded?

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  • Keep in mind that this answer may vary from country to country, so the answer in the US (which the Investopedia article is likely referring to) may be different from, say, European markets. Aug 4 '13 at 12:58
  • When you sell options, you've sold your rights and have taken on an obligation. Dec 5 '13 at 0:14
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Do you simply get call options you can sell on an options exchange?

No, you don't get call options that you can sell on an options exchange. Rather, you get rights that you can (generally) sell on the stock exchange.

The right issue is in essence a call option – in that it behaves like one, but it is not considered a standardized option contract.

is there a special exchange where such rights issues are traded?

No. It will normally be done on the stock exchange.

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  • Your first "Yes" is incorrect because "options exchange" != "stock exchange". It is not a call option because it doesn't trade on the options exchange. It may be called a warrant and act much like a call option, but it is not equivalent to a standardized call option. It will trade on the stock exchange, using a stock ticker with a suffix indicating it is right or a warrant. Mar 3 '14 at 1:23
  • @ChrisW.Rea My first yes was refering to the fact that you get to sell your rights on an exchange , be it stock or option Mar 3 '14 at 1:46
  • Then you phrased it wrong. "Yes" should be reserved to affirm exactly what the OP suggested: That you get call options [you don't] that you can sell on an options exchange [you can't]. Rather, you could have said something like "No, you don't get call options that you can sell on an options exchange. Rather, you get rights that you can (generally) sell on the stock exchange, instead." If you didn't want to use "no" (too strong?) then try "not quite". But "yes" is just wrong. Mar 3 '14 at 1:52
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    @ChrisW.Rea Thanks for the edit and teaching me how to phrase the sentence !!! Mar 3 '14 at 2:30

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