Answer #1

There are two most commonly used terms in the stock market and these are stock option and stock warrant. These two may appear similar in terms of definition but in terms of instruments they are very different.

Stock option is a contract between two investors. These investors either purchase or sell the products for a specific price. The company who manufactures or owns the product doesn’t profit in here. Only the investors benefit from this transaction. Stock options can be exercisable anytime within their life and or at their expiration. Lastly, stock options have a set of strict rules regarding their sale that should be followed.

In comparison to stock option, stock warrant is a contract between the company and the investor. If the company issues a stock warrant, they either buy or sell stocks from the investors. Unlike stock option, the company is the one that profits during a transaction. Its exercisability is only issued at their expiration. And to cater to the company’s needs, stock warrants terms are highly customized.

Answered By: cat_aspartame [32 ]