Warrants

A warrant is a financial instrument, which was issued with certain conditions. The issuer of that warrant sets those conditions. Sometimes the warrant and common or preferred convertible stock are issued by a startup company bundled together as "units" and at some later date the units will split into warrants and stock. This is a common financing method for some startup companies.

As an example of a "condition," there may be an exchange privilege which lets you exchange 1 warrant plus $25 in cash (or even no cash at all) for 100 shares of common stock in the corporation, any time after some fixed date and before some other designated date. (And often the issuer can extend the "expiration date.")

So there are some similarities between warrants and call options for common stock.

Both allow holders to exercise the warrant/option before an expiration date, for a certain number of shares. But independent parties, such as a member of the Chicago Board Options Exchange, issue the option while the warrant is issued and guaranteed by the corporate issuer itself. The lifetime of a warrant is often measured in years, while the lifetime of a call option in months. Sometimes the issuer will try to establish a market for the warrant, and even try to register it with a listed exchange. The price can then be obtained from any broker. Other times the warrant will be privately held, or not registered with an exchange, and the price is less obvious, as is true with non-listed stocks.