Call Warrant

A warrant that gives the holder the right to buy the underlying share for an agreed price, on or before a specified date.

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A warrant is similar to an option, the main difference is that warrants are issued by a company attempting to raise capital.

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Discover the advantages of this high-return investment tool that's largely unexploited by investors. What Are Warrants?

Option to purchase a certain number of shares at a stated price for a specified time period at a subscription price that is higher than the current market price (properly called subscription warrant). A warrant may or may not come in a one-to-one ratio with the stock already owned. Unlike a put or call option, a warrant is usually good for several years; some, in fact, have no maturity date and are known as perpetual warrants. Warrants are often given as sweeteners for a bond issue (e.g., to lower the interest rate or enhance the marketability). Warrants included with a bond may also exist in a merger when the acquiring company offers cash plus warrants in exchange for voting common stock of the acquired business. Generally, warrants are detachable from the bond and have a market life of their own. Warrants pay no dividends nor do they have voting rights. The warrant enables the holder to take part indirectly in price appreciation. See also Detachable Stock Warrant; Undetachable Stock Warrant.

A certificate issued by a corporation that entitles the person holding it to buy a certain amount of stock in the corporation, usually at a specified time and price.

A stock warrant differs from a stock option only in that an option is offered to employees and a warrant to the general public. A warrant gives the person holding it a right to subscribe to capital stock.