A commitment by a company to buy back its stock should its price drop below a specific level. Effectively, repurchasing a considerable amount of shares in a short period of time or on a regular basis means the company has established an implicit “floor” on its stock price. This also has the effect of granting shareholders an option to turn shares in to the company.

The floor can be created either by selling puts listed on an exchange or by issuing equity put warrants, against a premium in the form of an up-front cash payment. In return for this premium, the company is obligated to buy back its stock at the strike price if it falls below it at expiration.