Callable Common Stock

Calling all common stockholders! A callable common stock is one in which the issuer (or a third party) has the right to repurchase the stock after a certain period of time and at a specific price.

Let's say Phil Collins owns 150 shares of Call Me Uncommon Inc. They are callable at 107% of the current market price, which at the moment is $200 a share. So, Call Me Uncommon could force Phil to sell his shares back if the price hits $214. As the shares start to approach this level, the probability of the stock being called increases. It is doubtful the price of these callable stocks will go up much beyond the $200 price since everyone knows Call Me Uncommon will probably call the shares in.

Since there is some amount of risk of the shares being called, the Financial Industry Regulatory Authority (FINRA) requires that it be explicitly disclosed if a common stock is callable.