Call Warrant
 |
Definition of 'Call Warrant'A financial instrument that gives the holder the right to buy the underlying share at a specific price, on or before a specified date. Call warrants are often included in a new equity or debt offering from a company, in order to provide an added inducement to potential investors. Call warrants are usually detachable from the accompanying stock or bond certificate and trade separately on major stock exchanges.Also known as a warrant. |
 |
Investopedia explains 'Call Warrant'The price at which the warrant holder can buy the underlying stock is called the exercise price or strike price. This strike price is often set "out-of-the-money," i.e., it is fixed at a certain percentage above the current trading price of the underlying stock.The inclusion of a call warrant feature may enable the company to lower the cost of its debt. The risk of potential equity dilution to the issuer, in the event of all the warrants being exercised, is more than offset by the additional equity capital available to the company at no additional cost, an especially important consideration during periods of severe stress in financial markets. While a call warrant has a strike price and expiration date just like an option, there are some fundamental differences between the two. Warrants are issued by companies, while exchange-traded options are listed by an exchange. Warrants also have much longer expiration periods than options. |
Related Definitions
Articles Of Interest
-
Warrants: A High-Return Investment Tool
Discover the advantages of this largely unexploited investment vehicle. -
How are stock warrants different from stock options?
A stock option is a contract between two people that gives the holder the right, but not the obligation, to buy or sell outstanding stocks at a specific price and at a specific date. Options ... -
Digging For Profitable Delistings
Deregistration can provide opportunities for savvy investors. We'll show you how to cash in. -
Warrants And Call Options
Warrants and call options are securities that are quite similar in many respects, but they also have some notable differences. Both give the holder the right, but not the obligation, to buy a ... -
Private Equity A Trendsetter For Stocks
In this article, we'll show you how private equity sets the trend for stocks everywhere. -
Investing In Stock Rights And Warrants
Many companies choose to issue rights or warrants as an alternative means of generating capital to avoid dilution of existing share value. -
Warrants
Learn more about this derivative security. -
Are High-Yield Bonds Too Risky?
Despite their reputation, the debt securities known as "junk bonds" may actually reduce risk in your portfolio. -
What is a derivative?
A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, index or security. Common underlying instruments include: bonds, commodities, ... -
Find Investment Quality In The Income Statement
Use these key attributes to uncover top-level investments.
Free Annual Reports