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] – [PDF]
  • Warrant economics, call-put policy options and the fallacies of economic theory – [PDF]
  • Call Warrant Listing and the Behavior of its Underlying Spot Market: Some Evidence from Bursa Malaysia – [PDF]
  • Investment banks' stock ratings, call warrant issuance, and responses from heterogeneous investors: Evidence from Taiwan – [PDF]
  • Warrant Economics, Call-Put Policy Options and the Great Recession – [PDF]
  • A threshold model for the Hong Kong warrant prices – [PDF]
  • Convertible bonds: Valuation and optimal strategies for call and conversion – [PDF]
  • Impact of warrant introductions on the behaviour of underlying stocks: Australian evidence – [PDF]
  • Robustness of option-like warrant valuation – [PDF]
  • An empirical analysis of warrant prices versus long‐term call option prices – [PDF]