Put Warrant

DEFINITION of 'Put Warrant'

A type of security that gives the holder the right (but not the obligation) to sell a given quantity of an underlying asset for an agreed upon price on or before a specified date. A put warrant is a company-issued option to sell back to the issuer a specified number of shares of the company's common stock at a particular price sometime in the future. Unlike options that are instruments of an exchange, warrants - including put and call warrants - are issued by companies.

BREAKING DOWN 'Put Warrant'

There are two types of warrants - put warrants and call warrants. All warrants have an expiration date - the last day that the rights of the warrant can be exercised. If a warrant is not exercised before the end of its fixed tenure, it expires worthless. A put warrant's exercise price (also called the strike price) is the price at which the holder can sell the warrant. Both put and call warrants are classified by their exercise style. American warrants can be exercised anytime on or before the expiration date; European warrants can only be exercised on the day of expiration. Investors can use put warrants to hedge against falling share values of stock held in their portfolios.

RELATED TERMS
  1. Warrant

    A derivative that confers the right, but not the obligation, ...
  2. Call Warrant

    A financial instrument that gives the holder the right to buy ...
  3. Warrant Premium

    The amount that an investor must pay above the current market ...
  4. Covered Warrant

    A type of warrant that allows the holder to buy or sell a specific ...
  5. Piggyback Warrants

    Additional warrants that are acquired following the exercise ...
  6. Harmless Warrant

    A warrant that requires the holder to surrender a similar bond ...
Related Articles
  1. Professionals

    Warrants

    Although warrants are not very common any more, they are not all that hard to value in practice.
  2. Options & Futures

    Warrants: A High-Return Investment Tool

    Discover the advantages of this largely unexploited investment vehicle.
  3. Investing Basics

    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 ...
  4. Options & Futures

    A User's Guide To Warrants

    These investment vehicles are relatively uncommon in the United States, but they do still appear in U.S. markets.
  5. Investing Basics

    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.
  6. Professionals

    E. Warrants

    A warrant is a security that gives the holder the opportunity to purchase common stock. Like a right, the warrant has a subscription price; however, the subscription price is always above the ...
  7. Professionals

    Other Equities

    Series 7 - Equities Section 3: Other Equities
  8. Professionals

    Warrants and Rights

    Warrants and Rights
  9. Investing Basics

    Explaining Wedding Warrants

    A wedding warrant is a warrant that can only be exercised if the host asset, usually a bond or preferred stock, is surrendered.
  10. Professionals

    Other Types of Equity Securities

    FINRA Series 6 Exam Study Guide - Other Types of Equity Securities. Other equity securities: American Depository Receipts (ADRs), rights, warrants, options, Excange traded funds(ETFs), Hedge ...
RELATED FAQS
  1. Are warrants more desirable than options?

    Understand what stock warrants are, the differences between warrants and options, and learn whether warrants or options are ... Read Answer >>
  2. Can warrants be written on any security?

    Read about the different kinds of securities that may have warrants written on them, including which types of warrants are ... Read Answer >>
  3. I own some stock warrants. How do I exercise them?

    Typically, stock warrants are derivative instruments added to new issues of stocks or bonds to make these issues more attractive. ... Read Answer >>
  4. Is there a secondary market for warrants?

    Find out how to trade warrants on the primary market, the secondary market and the over-the-counter market, including how ... Read Answer >>
  5. Are warrants traded by brokers?

    Learn about the role of investment brokers in trading warrants, both in normal stock exchanges and over-the-counter derivatives ... Read Answer >>
  6. 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 ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center