Surprisingly no mention of stock warrants on ET. Years ago (20 years) I took a night school course on investing and all I remember being mentioned was stocks and warrants. Are warrants obsolete now because of the popularity of options? Anybody trade warrants?
Many years ago, I traded warrants vs listed options. For many years, many small stocks came out with units. A unit was a share of common+warrant. This was done by small companies as a quick and easy way to have a second round of funding. Since this market for smaller underwritings has all but gone away, there are a lot less warrants out there to trade.
Yes .... that is sort of refreshing my memory. You would buy a share+warrant for say $10.00 and that gives you the right to buy another share at $10.00, and the warrant does not expire.
They expired. Anywhere from 2 to 5 years. Sometimes there were two warrants. One for 2 years and one for 5. My brother and father are securities attorneys and did a lot of these.
Leap options are the successor to warrants. they are near equivalents. warrants on occasion were extended near expiration and then the price would jump on the announcement.
One big difference is that you can sell to open all the leaps you want but can't short warrants unless you can get a locate and a borrow. It's often an issue and keeps them trading higher than options do.
I traded them. It's nothing but rip because they are only private markets of usually just the bank or just a single company, ie. much like OTC. So you trade against the bank only (or vice-versa), and you can imagine who wins... I understood this mechanism only much later... Ie. there is nothing like an NBBO with them. Hands-off I would say from my own negative experience with such private warrant markets of the banks... Better stick with listed options.