A call option whereby a convertible bond (CB) can be called back if the share price exceeds a specific level known as the trigger (call trigger or call hurdle). The convertible bond cannot be called and the bondholder cannot be required to convert it as long as the trigger is not broken through. The trigger represents a minimum level that is higher than the conversion price and above which the bond might become callable. It is expressed as a percentage of the conversion price (for example, the trigger level could be set at 120%, 130% or 150% of the conversion price). Not often, the call condition should be effective for a period of time (during a period of consecutive trading days).
Finance
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