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Finance: What is a Warrant?
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What is a warrant? Hit play to find out.

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Finance: What is a Warrant? 8 Views


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What is a warrant? Hit play to find out.

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Transcript

00:00

Finance allah shmoop what is ah warrant Oh it's Acute

00:07

option Like kind of a stock option Light Yeah That's

00:11

How to think about it anyway Okay Okay It pretty

00:12

much feels just like a stock option And yes there

00:16

are put warrants and call warrants in the same vein

00:19

as put options and call options So then what's the

00:22

diff why don't we just call a warrant a stock

00:24

option Well warrants have you know their own little characteristics

00:27

here and they're usually issued by the company itself where

00:31

a stock options on say microsoft will They can be

00:34

issued by anyone who deals in options like goldman morgan

00:38

ups sumitomo whoever whatever investment bank that makes capital markets

00:42

trading happened they can issue options trade him have a

00:45

spread and then make profits in them and there's nothing

00:47

the company can really do about it They can all

00:49

create derivative securities on stocks or bonds of their own

00:52

volition And the company itself just kind of stands there

00:56

looking by and wondering why they didn't get into the

00:59

investment banking business Well goldman morgan and the others then

01:02

offer trading in those options on exchanges in regular form

01:07

Such that many buyers and sellers generally come together liquid

01:10

lee to trade and you know generate profit margins for

01:13

the desks of the bank's trading the securities right The

01:16

banks are basically the casino house and they end up

01:19

making most the money most of time Got that Okay

01:21

another difference warrants and options here Warming's can last five

01:25

ten twenty years that's Usually how many weeks options last

01:29

and the question remains Why would a company issue what

01:32

are essentially cheap stock options too Others to buy slices

01:36

of its own pie While the answer as with most

01:39

of these types of company deals is that the company

01:41

has to issue those warrants to get a deal done

01:44

like you know to settle a patent dispute or created

01:47

distribution or manufacturing partnership or some of their tactical arrangement

01:51

to make the good better and to make the problems

01:54

go away well warrants generally or simply held for the

01:57

duration of the partnership or of the company's existence is

02:00

an independent and city well and conversely options are traded

02:04

liquid leon exchanges all over the world and they can

02:07

be sold without a whole lot of discussion with company

02:10

Here this kind of warrant which gives you the right

02:12

to throw a piece of paper in your own financial

02:15

asset jail Very different kind of warrant than this one 00:02:18.383 --> [endTime] You stay away from the arrest warrants

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