Put Warrant

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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.

INVESTOPEDIA EXPLAINS '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.

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RELATED FAQS
  1. 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 Full Answer >>
  2. What is a direct rights offering?

    A direct rights offering is an offer made by a company, directly to existing shareholders, granting them rights to purchase ... Read Full Answer >>
  3. Can warrants be written on any security?

    Conceptually, warrants can be written on any type of security issue. The structure of a warrant only changes the timing of ... Read Full Answer >>
  4. How are mezzanine loans structured?

    Mezzanine loans are a combination of debt and equity finance, most commonly utilized in the expansion of established companies ... Read Full Answer >>
  5. Is there a secondary market for warrants?

    Warrants can be purchased directly from a warrant issuer (primary market transaction) or through a listed exchange (secondary ... Read Full Answer >>
  6. Are warrants traded by brokers?

    In finance, warrants can be traded through a bank or brokerage. When this happens, the broker's client submits a buy or sell ... Read Full Answer >>
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