Could someone explain how a delivery option works? I think that I do not understand the text in the Curriculum, because it makes no sense for me… I understood from it that it is just rebuying bonds by cash. But I guess this is a general feature of sinkers.
Suppose that under the sinking fund provision you have to retire 100 bonds today. One approach is for the trustee to select 100 bonds at random from those outstanding; you’ll purchase those at par from the current bondholders and the trustee will retire them. Another approach is for you to purchase 100 bonds on the open market and deliver them to the trustee to be retired; that’s the delivery option. If the bonds are trading below par, then you’d prefer that option as it will be less expensive.
thank you 
You’re welcome.
In case the issuer buys bonds in open market to deliver to bond’s trustee, what about bonds that currently hold by investor ?
What about them?