DEFINITION of 'Put Warrant'

DEFINITION of 'Put Warrant'

 

A type of security that gives the holder the right (but not the obligation) to sell a given quantity of an underlying asset for an agreed upon price on or before a specified date.

A put warrant is a company-issued option to sell back to the issuer a specified number of shares of the company's common stock at a particular price sometime in the future. Unlike options that are instruments of an exchange, warrants - including put and call warrants - are issued by companies.

 

 

INVESTOPEDIA EXPLAINS 'Put Warrant'

There are two types of warrants - put warrants and call warrants. All warrants have an expiration date - the last day that the rights of the warrant can be exercised. If a warrant is not exercised before the end of its fixed tenure, it expires worthless. A put warrant's exercise price (also called the strike price) is the price at which the holder can sell the warrant. Both put and call warrants are classified by their exercise style. American warrants can be exercised anytime on or before the expiration date; European warrants can only be exercised on the day of expiration. Investors can use put warrants to hedge against falling share values of stock held in their portfolios.

 

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