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What Is a Share Warrant?

What Is a Share Warrant? thumbnail
A share warrant provides you written proof of stock ownership.

A share warrant, also called a stock warrant, is a legal document that says how many shares you have a right to in a certain company. Because share warrants differ from stock options, they offer unique benefits for the purchaser and the company.

  1. Share Warrants vs. Stock Options

    • Share warrants represent new shares issued by the company itself. Stock options are transferred from investor to investor, and they offer the holder the option to buy shares in the future for a certain price.

    Benefits

    • Companies benefit from selling share warrants because it helps them raise money. When company stocks are bought and sold on the open market, it does not help the company directly. Investors can usually purchase share warrants for a lesser price than stock options cost. Share warrants provide a better long-term investment to the investor with terms that can last for up to 15 years, compared to stock options with two- to three-year terms.

    Types of Share Warrants

    • There are two types of share warrants: call warrants and put warrants. Call warrants represent a specific number of shares that can be purchased from the company at a certain price and date. Put warrants represent a certain amount that can be sold back to the issuer at a specific price and date.

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