Talk:Warrant (finance)
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I am a little confused as to who a third party can issue a naked warrant when it is not the issuer of the instrument upon which the warrant is based. In other words, how can a bank issue a promise that another party will issue stock at some point in the future?
Mike Black
- Good question. A third party cannot force the underlying issuer to issue new stock. They can however deliver existing stock. That's where the difference between warrants and stock options comes in. Warrants are options, which can force the issuer to issue new stock. Issuers of other stock options deliver shares that they've bought in the market. DocendoDiscimus 22:45, 3 October 2005 (UTC)
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- I wonder where this difference comes from. Can you refer me to a source about this difference between stock options and warrants? I have seen contractual grants of options for purchase of shares that will be first issued upon exercise (employee stock options are just one example). I thought the warrant is just a deed and that was its "extra strength". Thanks. Shaio 22:18, 6 November 2005 (UTC)
[edit] Covered Warrants
What are Covered Warrants?
- These are call warrants with the underlying security held in a trust or something similar to reduce risk for the holder. --Avocado kebab 05:13, 22 October 2006 (UTC)
[edit] ASX Warrants not the same as US warrants?
I think there's scope for confusion here. I believe a warrant in Australia is not the same as a US warrant. On the ASX in Australia, a warrant is an exchange traded 'long dated' option contract, issued by approved financial institutions. The number of existing shares in not changed by these options.
Outside of the ASX realm, warrants are 'over-the-counter' options, or company options, issued by companies and sold to potential shareholders. These will result in new shares when exercised.
Am I right, or mis-informed?? --Avocado kebab 05:13, 22 October 2006 (UTC)
- I think you're right, the reference to ASX should be removed as it's not general.
Zero Coupon Convertible Warrant this type of warrant are generally issued without any periodical interest and return and this is subject to be converted into shares of the company after a specified period. this type of warrant generally issued to promoters or managerial person.
