What is the difference between warrants and options?

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I know both are similar products, but if a warrant is issued by a company where the shares purchased from exercising the warrants are issued by the company in the form of new shares… where does the shares from exercising your options come from? Who’s shares are you buying?

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Anonymous 0 Comments

>where does the shares from exercising your options come from? Who’s shares are you buying?

When you buy an option, you pay the seller a premium. The seller is required to provide the shares when you exercise the option. The seller either buys it from the market when you want it or they already had it (a covered call)

Edit: Another difference is the option is normally a separate transaction, but a warrant is normally an addition for to other deals like [this deal](https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-goldman-sachs-sale-billions-return-bailout-2020-5-1029212109) by Berkshire Hathaway

> The famed investor’s company handed the funds to the investment bank in 2008 at the height of the financial crisis. In exchange, it received $5 billion in preferred stock paying a 10% annual dividend, as well as **warrants enabling it to buy 43.5 million of Goldman’s common shares at $115 each at any point in the ensuing five years.**