I own some stock warrants. How do I exercise them?

By Investopedia Staff AAA
A:

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.

RELATED FAQS

  1. What is the difference between a long position and a call option?

    Learn what a long position in a stock is, what a call option is, and the difference between owning shares of a company and ...
  2. Why does delta only range from 1 to -1?

    Learn what the option Greek delta is, what affects the value of delta for an option and why the delta of an option can only ...
  3. What kinds of financial instruments can I use a straddle for?

    Learn about options and straddles; discover some examples of optionable assets and how a straddle is used for financial instruments.
  4. How do I determine what the right situation is to make a covered call?

    Learn what a covered call is, how to use a covered call strategy, and what situations to sell a call option against a long ...
RELATED TERMS
  1. Catastrophe Equity Put (CatEPut)

    Catastrophe equity puts are used to ensure that insurance companies ...
  2. Open Trade Equity (OTE)

    Open trade equity (OTE) is the equity in an open futures contract.
  3. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...
  4. Short Put

    A type of strategy regarding a put option, which is a contract ...
  5. Wingspread

    To maximize potential returns for certain levels of risk (while ...
  6. Volatility Smile

    A u-shaped pattern that develops when an option’s implied volatility ...

You May Also Like

Related Articles
  1. Trading Strategies

    Top Day Trading Instruments

  2. Options & Futures

    Give Yourself More Options With Real ...

  3. Options & Futures

    The Future Is Now: All About Futures ...

  4. Options & Futures

    How To Protect A Short Position With ...

  5. Options & Futures

    How To Build Valuation Models Like Black-Scholes ...

Trading Center