Method and system relating to options on a debt transaction

Various embodiments of the present invention are directed to methods and systems relating to options on a debt transaction (e.g., put and call options may be utilized to create an economic effect similar to a reduction in debt of an issuer in exchange for enhancing the terms of a debt holder's existing debt investment). More particularly, one embodiment relates to a method implemented by a programmed computer system for use in a financial transaction involving a debt issuer and a debt holder, comprising: entering into a put/call contract between the debt issuer and the debt holder, wherein the debt issuer sells the put and buys the call and the debt holder buys the put and sells the call; inputting data associated with the put/call contract regarding conditions under which the debt issuer may retire outstanding debt of the debt issuer; inputting data associated with the put/call contract regarding conditions under which the debt holder may retire outstanding debt of the debt issuer; and retiring at least some of the outstanding debt, wherein the outstanding debt is retired utilizing calculations based upon the input data regarding conditions associated with the put/call contract under which the debt issuer and the debt holder may retire outstanding debt.