0

I have a bond and would like to know whether its possible to set something similar to a stop order, i.e. That you make an order to sell the bond if the bond price reaches a specified low value?

My stock broker informed me that this can only be done with stocks and not bonds whether I don't see the reason why it wouldn't be available for bonds as well?

They informed me that the order which can be made with a bond is to sell at a price (or better), which I don't want.. as if it is better, I want to keep the bond as it has a good coupon

1

The bond in question would need to have a put provision, defined as follows:

A condition that allows a bondholder to resell a bond back to the issuer at a price - which is generally par - on certain stipulated dates prior to maturity. The put provision is an added degree of security for the bondholder, since it establishes a floor price for the bond. This mitigates the risk of a decline in the bond price in the event of adverse developments such as rising interest rates or a deterioration in the credit quality of the bond issuer.

References

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.