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What is the difference between a stock warrant and a stock option?

In: Investing and Financial Markets, Business Law, Stock Market, Stock Options and Futures, Incorporation [Edit categories]

Answer:

They are very similar. Both are options to purchase stock at a fixed price. Warrants are typically issued to institional investors in conjunction with another debt or equity investment, while options are typically stand-alone.

(A stock option can also be an option to sell a stock at a fixed price. I have never seen a warrant that is an option to sell stock, but it is possible to draft such an agreement.)

First answer by Even Steven. Last edit by Even Steven. Contributor trust: 69 [recommend contributor ]. Question popularity: 5 [recommend question].

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