According to experts, there are two distinct differences between warrants and shares. The first is that warrants have a defined expiry date, and the second is that the price of a warrant is heavily dependent on the price of the underlying stock, especially near the expiry date of the warrant.
In the trading market, warrants can be divided into call warrants and put warrants, with the purchase of a call warrant being the only way to gain if the underlying stock rises in the future. However, an investor who buys a put warrant can only earn money if the underlying stock price falls in the future. In terms of exercise status, warrants can also be divided into European-style warrants and American-style warrants. American style warrants allow the holder to exercise their rights at any time between the listing date and the expiry date of the equity security, whereas European style warrants allow the holder to exercise their rights only on the expiry date.
Both call and put warrants are leveraged and time-barred, and warrants have a time value that decreases as the expiry date of the warrant approaches. The holder of a warrant is not a shareholder of a listed company and therefore does not enjoy the basic rights of a shareholder, such as the right to vote and the right to participate in dividends. For warrants, if the investor is correct about the price of the underlying stock, he or she will be able to earn a higher return.
A warrant is a certificate to buy or sell shares at a certain price for a certain period of time and is not a stock, but a right that has to be exercised within a certain period of time or it will be voided. A share is considered to be the holder's investment in a listed company and is entitled to dividends, and will remain in existence and traded if there are no changes.
