Series 65: Warrants

Warrants

A warrant is a financial instrument that gives the holder the right to purchase securities from an issuing company at a specific price in the future. When warrant holders execute their right to buy shares, it increases the number of shares outstanding in the market, thereby diluting the holdings of existing shareholders.

Buyers of a warrant pay a premium for the right to buy a set amount of stock at a stipulated price, called a strike price. This right to buy may be exercised at any time up to a stated termination date, after which the warrant will expire. Warrants are meant to be kept for a relatively long time before use, usually 2 to 10 years, and are usually not worth anything until the com