Talk:Warrant (finance)

Naked warrant?

I am a little confused as to how a third party can issue a naked warrant when it is not the issuer of the instrument upon which the warrant is based. In other words, how can a bank issue a promise that another party will issue stock at some point in the future?

Mike Black

Good question. A third party cannot force the underlying issuer to issue new stock. They can however deliver existing stock. That's where the difference between warrants and stock options comes in. Warrants are options, which can force the issuer to issue new stock. Issuers of other stock options deliver shares that they've bought in the market. DocendoDiscimus 22:45, 3 October 2005 (UTC)

I wonder where this difference comes from. Can you refer me to a source about this difference between stock options and warrants? I have seen contractual grants of options for purchase of shares that will be first issued upon exercise (employee stock options are just one example). I thought the warrant is just a deed and that was its "extra strength". Thanks. Shaio 22:18, 6 November 2005 (UTC)

Covered Warrants

What are Covered Warrants?

These are call warrants with the underlying security held in a trust or something similar to reduce risk for the holder. --Avocado kebab 05:13, 22 October 2006 (UTC)

The definition of covered warrant as "a warrant issued in a foreign currency" is pretty strange. A covered warrant is issued by a bank or such and is commonly exchange-traded, for example Société Générale is a large issuer. They (and their close relative, the turbo warrant) are popular with retail investors on European stock exchanges and come in put and call varieties. In addition to elucidating the "foreign currency" claim, the article should probably make a clearer difference between warrants issued by companies themselves (the current focus) and the exchange-traded covered variety. See http://www.incademy.com/training/Covered-Warrants-I/Introduction/1087/10002/ for more information.

Looking at for example OMX Helsinki listings, it seems that what they call "options" are close to what this article mostly talks about (though still exchange-traded) and what they call "warrants" are actually covered warrants (ie. more like stock/index options). 85.188.1.90 (talk) 16:01, 19 March 2008 (UTC)

ASX Warrants not the same as US warrants?

I think there's scope for confusion here. I believe a warrant in Australia is not the same as a US warrant. On the ASX in Australia, a warrant is an exchange traded 'long dated' option contract, issued by approved financial institutions. The number of existing shares is not changed by these options.

Outside of the ASX realm, warrants are 'over-the-counter' options, or company options, issued by companies and sold to potential shareholders. These will result in new shares when exercised.

Am I right, or mis-informed?? --Avocado kebab 05:13, 22 October 2006 (UTC)

I think you're right, the reference to ASX should be removed as it's not general.

Zero Coupon Convertible Warrant this type of warrant are generally issued without any periodical interest and return and this is subject to be converted into shares of the company after a specified period. this type of warrant generally issued to promoters or managerial person.

Introduction

Hi all,

I'm a bit confused by the opening line:

"A warrant is a security that entitles the holder to buy stock of the company that issued it at a specified price, which is much higher than the stock price at time of issue."

I understand that the warrant entitles the holder to buy stock at a specified point and price in the future, but what is the value of the specified price being much higher than the price at time of issue? Unless the market value of the stock exceeded this specified , much higher price, no warrant would ever be exercised? I'm sure I'm missing something fundamental but any help would be appreciated.

Thanks,

James

equation

In the equation, what does the F mean?

It is probably the Face value -- lucasbfr ^talk (using User:Lucasbfr2) 12:58, 24 September 2007 (UTC)

Statement Regarding Issuance of New Shares for Employee Stock Options

The article makes the following claim: "When a call option is exercised, the owner of the call option receives an existing share from an assigned call writer (except in the case of employee stock options, where new shares are created and issued by the company upon exercise)."

In general, I don't believe this is true. Generally, employee stock options are carved out the common for sequence of deals, e.g. Round A. In this sense, the options are already issued, and hence not created and issued upon exercise. This statement should probably be corrected, or at least modified to illustrate that employee options may also come from an existing pool of common stock. —Preceding unsigned comment added by 69.106.244.163 (talk) 22:06, 11 August 2008 (UTC)

1992 California warrants interest rate

NPR Marketplace (radio program) reported 2009-07-02 that current California government warrants paying 3.75% are about 1% lower than 1992 California warrants. The article section Warrant (finance)#Government issued says the 1992 warrants paid 18% interest, but 5% seems to be the prevailing number in a search of pay newspaper archives [1]. Can someone investigate the discrepancy and reference the correct percent (and state the exact year)? Milo 23:55, 2 July 2009 (UTC)

warrants illegal in the US?

I have read that the German „Optionsscheine“ (which equal „warrants“?) are illegal in the U.S. However, I don’t see anything about this in the article?! --A11w1ss3nd (talk) 18:02, 10 July 2020 (UTC)