Warrants


A warrant is a derivative security that gives the holder the right to purchase a certain amount of securities (usually equity) from the issuer at a specific price and within a certain time frame. Warrants are often included in a new debt issue, such as a bond or preferred stock, as a "sweetener" to entice investors.

The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months.