The warrant is a financial instrument issued by a listed company that allows its holder to buy (call warrant) or sell (put warrant) a certain underlying asset (usually shares of the issuing company) at a certain price (strike price), within a certain deadline (American-type warrant) or at a certain pre-established date (European-type warrant).
The call warrant is usually issued at the same time as a capital increase (shares cum warrant) or the issue of a bond loan (bonds cum warrant), to facilitate the raising of capital by the issuing company.
Warrants belong to the category of derivative instruments and as such their value depends on the value of the underlying asset. The price of the warrant is called a premium and represents the value that must be paid to buy/sell the underlying asset at the price established in the contract, the strike.
In the case of a call warrant, if the strike price is higher than the market price of the underlying, the holder will not be in a position to exercise the purchase option and the value of the warrant will be very low, or zero. Warrants can also be traded separately from the underlying and are traded on the MTA market.
