Warrants Meaning: A Plain-English Definition
The warrants meaning in finance, with a worked warrants example, company warrants vs structured warrants, and what Covered Warrants means.
Warrants meaning
A warrant is a security that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a fixed strike price on or before a set maturity date. This is the warrants meaning in finance whether it's a company warrant or an exchange-listed structured warrant.
Warrants example
A simplified warrants example: if a call warrant on Stock XYZ has a strike of RM5.00 and Stock XYZ trades at RM5.50 before maturity, the warrant carries intrinsic value because the underlying is above the strike — the exact payout depends on the entitlement/conversion ratio set by the issuer.
Company warrants vs Covered Warrants
Company warrants are issued directly by a business, often attached to bonds, to raise capital. "Covered Warrants" is another name — common in the UK and parts of Asia — for the same structured warrant product, so-called because the issuer "covers" (hedges) its exposure.
FAQ
What is the warrants meaning in simple terms?
A warrant is a derivative security that gives the holder the right, but not the obligation, to buy (call warrant) or sell (put warrant) an underlying asset at a fixed strike price before a set maturity date.
See the structured warrants screener or browse more learn articles.