can someone tell me what the hell a warrent is. I keep reading about issues with them in FSA. but no where does it explain what they are or do. thanx
Think option. The most common situation you will see in the material is a sale (or the other side, purchase) of a bond that has warrents (ie options) to buy a specified number of shares of stock at a set strike, etc. Usually detachable. Questions address alocating the price of the bond between the two.
Or think of it as a “right” (not as opposed to left, but as a guarantee) for you to buy a security, usually equity, at a specified strike price. If the strike is above the market price of that security you would not exercise your right (not pay more for something that in the market is worth less). But if the strike price is below the security’s price, than yes, you will pay less for something that is worth in the market more.
It think It’s the term used in trading place for traded options (call/put) I discoverd it too when i went into a virtual portfolio… like when you buy a put or a call, they are all called warrant
It would work different for calls than it works for puts. A call is an option to buy, a put is an option to sell, at a specified strike price, at a specified date, a specified quantity of the security, all of these being specified in your call/put buying contract. For a call, you would exercise your option when the market price of the security is lower than your strike price: your call party is obligated to sell to you, at your (lower than market) strike price. This is the “in the money” call option. If out of the money, the option expires unexercised. For a put, you would exercise your option when the market price of the security is above your strike price: your put party is obligated to buy from you at the (higher than market) strike price. This is the “in the money” put option. If out of the money, the option expires unexercised.
The explanation Super I provided is clear and accurate. They’re most similar to call options (not puts). A few features of warrants that distinguish them from exchange-traded call options include: 1) They’re issued by the company whose shares are underlying the warrant. Exchange-traded call options are created by financial institutions and individuals 2) Related to 1): Warrants cause shareholder dilution because new shares are issued by the company when warrants are exercised. Exchange-traded call options merely transfer the ownership of shares already issued and outstanding 3) The contractual life of a warrant is substantially longer than that of an exchange-traded call option. Warrants have lives of many years while the life of an exchange-traded call option is less than one year, with LEAPs being the exception http://en.wikipedia.org/wiki/Warrant_(finance) http://en.wikipedia.org/wiki/Call_option http://en.wikipedia.org/wiki/LEAP_financial_instrument
map1 Wrote: ------------------------------------------------------- > It would work different for calls than it works > for puts. A call is an option to buy, a put is an > option to sell, at a specified strike price, at a > specified date, a specified quantity of the > security, all of these being specified in your > call/put buying contract. > > For a call, you would exercise your option when > the market price of the security is lower than > your strike price: your call party is obligated to > sell to you, at your (lower than market) strike > price. This is the “in the money” call option. If > out of the money, the option expires unexercised. > > For a put, you would exercise your option when the > market price of the security is above your strike > price: your put party is obligated to buy from you > at the (higher than market) strike price. This is > the “in the money” put option. If out of the > money, the option expires unexercised. Of course, map1 is referring to “put warrants” usually awarded by corporations to their most senior executives. Should the stock tank, put warrants give senior executives the right to have the company pay them to destroy outstanding shares of stock. Angelo Mozilo was awarded put warrants on approximately 5 million shares of CFC. At a Congressional hearing last week, he was asked whether those put warrants were in the best interests of shareholders. He replied “Well they are antidilutive. It’s too bad that they destroy shares of CFC, I guess, but if anyone’s going to destroy anything at Countrywide, it might as well be me”.
orange looks great !!!