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What are the similarities and differences between rights, warrants and options?
Asked by: shshao Apr 21, 2008 - 92 Months Ago.
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From the investor's perspective, you can get similar results from rights, warrants, and call options. Which is, simply, leveraged profits if the stock price rises.
The differences are mainly from the issuer perspective:
* Rights are issued directly by the company to raise money. The expiry is typically weeks to months.
* Warrants are usually issued with other instruments by companies. For example, a debenture with attached warrants. The expiry may be up to several years.
* Options are issued by option writers, who are other traders. Options trade on, and are guaranteed by option exchanges. All options expire on the 3rd Friday of the month. Options price increments are defined by the option exchange.
* Put Options are made for price drops not gains. So only Call Options are similar to Rights and Warrants.
Answered by: sherwin - 92 Months Ago.
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