Typically, stock warrants are derivative instruments added to new issues of stocks or bonds to make these issues more attractive. The warrants are extra benefits that give their holders the right to buy stock within a company. Unlike call options, warrants are longer-term and backed by the issuing company rather than the Depository Trust Company. However, like call options, warrants can be traded freely in the open market after their initial issue and before their expiry date.

If you own warrants, regardless of how you purchased them, the easiest way to exercise them is through your broker, who will handle much of the paperwork and correspondence with the company that issued the warrant to you. All you need to do is give the warrants to your broker and instruct him or her as to what you would like to do. Alternatively, you can contact the issuing company directly, and they will then instruct you on how to exercise your warrants. Dealing directly with the company, however, will be a little more time consuming.

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