By: Rahim | July 22, 2015
A warrant is like an option - it gives the holder the right but not the obligation to buy an underlying security at a certain price, quantity and future time. It is unlike an option in that a warrant is issued by a company, whereas an option is an instrument of the stock exchange. The security represented in the warrant (usually share equity) is delivered by the issuing company instead of an investor holding the shares.
Types of Warrants
There are two different types of warrants - a call warrant and a put warrant.
• A call warrant represents a specific number of shares that can be purchased from the issuer at a specific price, on or before a certain date.
• A put warrant represents a certain amount of equity that can be sold ba...