The basics of stock warrants
A stock warrant gives the holder the right to purchase additional shares of stock at a specified price within a certain time frame. The warrant doesn't obligate the holder to buy, but rather merely gives the holder the option to do so. Because the warrant isn't mandatory, its value can never go below zero.
There aren't any standardized guidelines for structuring warrants, so each warrant has unique characteristics. Some companies allow warrant holders to buy one share of stock for each warrant owned, while others require multiple warrants for a share purchase. The price the warrant holder has to pay for the shares, which is known as the exercise price, also varies. Some warrants give investors only a short period to exercise, while others extend for years into the future.