options vs warrants?

Discussion in 'Options' started by econometrics, Nov 30, 2011.

  1. googled but dont find any seemingly right answer.

    what are the differences between an option (say CBOE) and a warrant (say HKEX)?
     
  2. rmorse

    rmorse Sponsor

    Are you asking for the difference between the two exchanges, or how to value a warrant vs an option?
     
  3. spindr0

    spindr0

    Warrants are like long term options - both enable you to buy the stock at a certain time and price.

    The main diffference is that the warrant is issued by the company who is the other party and it provides the shares if you exericse the warrant.
     
  4. rmorse

    rmorse Sponsor

    And, you can short an option freely, warrants require a locate, often difficult to get so warrants tend to trade above their option equivalent.
     
  5. MTE

    MTE

    As mentioned above by others, the main difference is that warrants are issued by the underlying stock's company or in some cases by a bank. Options, on the other hand, are not issued by anyone in that sense.

    Also, when warrants are exercised the company issues new shares, which then dilute the holdings of the existing shareholders, while in case of options no new shares are issued.