A call option that is not tradable, but rather is part of an instrument or structure, granting its issuer a right to call (i.e., redeem it) for cash or other consideration, usually if specific conditions are met. Such a call option can be embedded in a debt instrument, an equity instrument, or a hybrid instrument, or even in more complex structures and arrangements (generally, a host contract). Embedded options are by nature not tradable- that is, cannot be separated from the host contract by the issuer.

An example is an embedded call option that allows the issuer of an equity instrument (such as common stock) to reacquire that instrument after the passage of a specific period of time. Likewise, a callable bond includes an embedded call option, allowing the issuer to redeem it before maturity at its own discretion. The callable bonds generally bear higher coupon rates to compensate the holders for the potential risk of the early redemption (call by an issuer before maturity).