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Call Warrant

What is a 'Call Warrant'

A call warrant is 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.

Explaining '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.


Further Reading


A compare research of volatility between call-warrant and put-warrant based on GARCHmodel [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JXJG200803034.htm'>PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

Warrant economics, call-put policy options and the fallacies of economic theoryWarrant economics, call-put policy options and the fallacies of economic theory
papers.ssrn.com [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

Call Warrant Listing and the Behavior of its Underlying Spot Market: Some Evidence from Bursa MalaysiaCall Warrant Listing and the Behavior of its Underlying Spot Market: Some Evidence from Bursa Malaysia
www.tandfonline.com [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

Investment banks' stock ratings, call warrant issuance, and responses from heterogeneous investors: Evidence from TaiwanInvestment banks' stock ratings, call warrant issuance, and responses from heterogeneous investors: Evidence from Taiwan
www.sciencedirect.com [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

Warrant Economics, Call-Put Policy Options and the Great RecessionWarrant Economics, Call-Put Policy Options and the Great Recession
openaccess.city.ac.uk [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

A threshold model for the Hong Kong warrant pricesA threshold model for the Hong Kong warrant prices
www.tandfonline.com [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

Convertible bonds: Valuation and optimal strategies for call and conversionConvertible bonds: Valuation and optimal strategies for call and conversion
www.jstor.org [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

Impact of warrant introductions on the behaviour of underlying stocks: Australian evidenceImpact of warrant introductions on the behaviour of underlying stocks: Australian evidence
onlinelibrary.wiley.com [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

Robustness of option-like warrant valuationRobustness of option-like warrant valuation
www.sciencedirect.com [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …

An empirical analysis of warrant prices versus long‐term call option pricesAn empirical analysis of warrant prices versus long‐term call option prices
onlinelibrary.wiley.com [PDF]
… University of Technology, Guangzhou 510640,PRChina);Empirical Analysis on the Call Warrants Value … Sci.Tech.,Harbin 150040,China);On the Priced Mechanism of Warrant in our … 9, Zhang Zongcheng Wang JunZhang Zhongcheng Prof., College of Economics, Huazhong Univ …



Q&A About Call Warrant


What happens if you hold an in-the-money option and do not exercise it by maturity date?

Your option expires worthless if not exercised by maturity date.

Where do call warrants trade separately?

Call warrants usually trade separately on major stock exchanges.

If an investor holds both puts and calls, what determines which one he exercises first when there is only one month left until expiration ?

The investor will always choose to exercise his put first because doing so will give him more time to sell his shares than exercising his call would allow him .

How do warrants help private equity deals?

Frequently, these warrants are detachable and can be sold independently of the bond or stock.

How much does it cost to purchase a call warrant?

The price of purchasing a call warrant depends on its strike price and expiration date.

Are warrants similar to options?

Yes, both are discretionary and have expiration dates. The word warrant simply means to "endow with the right", which is only slightly different from the meaning of option.

Can options be exercised early?

Options cannot be exercised early unless they have been designed as American style options with this feature built into their terms and conditions of issue.

What are detachable from accompanying stock certificates?

Call warrants are often detachable from accompanying stock certificates.

What does it mean when you say that warrants can be attached to bonds or preferred stocks as sweeteners?

Warrants can be used in bonds or preferred stocks as sweeteners, allowing issuers to pay lower interest rates or dividends. They can be used to enhance yields of bonds and make them more attractive for potential buyers.

Why should investors avoid holding long positions in options during periods of high volatility ?

Investors should avoid holding long positions in options during periods of high volatility because they may end up losing all or part of their investment if prices move against them .

What is a call warrant?

A call warrant is a financial instrument that gives the holder the right to buy the underlying share at a specific price, on or before a specified date.

When can you exercise your rights under the terms of your warrant contract?

You can exercise your rights under the terms of your contract when you believe that exercising will be profitable for you.