How to Calculate the Value of Stock Warrants

By Motley Fool Staff – Updated Apr 29, 2025 at 11:17 PM

Key Points

Stock warrants give the right, not the obligation, to buy stock at a set price and time.
Warrant value includes intrinsic value and time value, boosting with stock price and time.
Interest rates impact warrant prices; higher rates increase their value.

Most stock market investors focus on ordinary common shares of a company's stock, but there are other types of securities that can give investors different types of exposure to a company. Stock warrants offer investors a leveraged opportunity to profit if the underlying stock rises in value, but each warrant has different terms that investors have to understand to calculate its true value. Let's take a closer look at stock warrants and how to value them.

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Finally, prevailing interest rates can also have an impact on warrant prices. The higher the interest rate, the more valuable it is to hold a warrant rather than having to spend the full share-price amount to buy shares outright.

Calculating an exact value for warrants is only possible by making theoretical assumptions about the future. By understanding these basics of warrants, though, you can get a good handle on whether the price of a warrant is reasonable or represents an opportunity.

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