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There are two types of warrants: a call warrant and a put warrant. A call warrant is the right to buy shares at a certain price in the future, and a put warrant is the right to sell back shares at a specific price in the future.
- The warrant may expire before the stock is sold, making it worthless. - If the company goes bankrupt, the warrants may become worthless. - The holder of a warrant may not be able to sell it on the open market if there is no demand for it.
Outstanding warrants are still considered to be valid because it simply means that the person who was named in the original arrest warrant has not yet been arrested. Additionally, ?outstanding? can also mean that the warrant is still active.
As with market options, the stock's market price could fall below the exercise price, at which point the rights or warrants would become worthless. Rights and warrants also become worthless upon expiration regardless of where the underlying stock is trading.
The easiest way to exercise a warrant is through your broker. When a warrant is exercised, the company issues new shares, increasing the total number of shares outstanding, which has a dilutive effect. Warrants can be bought and sold on the secondary market up until expiry.
In the case of a warrant that is not exercised at expiration, the warrant will become worthless. In the case of an in the money option, it will be automatically exercised at expiration. At the money or near the money options and out of the money options will expire worthless.
Also, warrants have time value. The longer a warrant has before it expires, the greater its value will be. That's because the further away the expiration date is, the more time the underlying stock has to rise in value.
The expiration date is the date on which the stock warrant expires. Once a stock warrant expires, it is no longer valid, and the holder loses the right to buy or sell the underlying stock at the exercise price.