Who is trading warrants?

[gaussian]

I had mentioned these in another topic about IB. I've seen warrants on a lot of stock issues in TWS.

I've always been curious about them (having heard of them from A Man For All Markets). I understand their basic principle - they share basically the same attributes as a call option, except:

1. They are not exchange traded (they are traded through a company offering)
2. They are dilutive (as opposed to standard options, which are non-dilutive iirc).
3. They are typically measured in years (similar to LEAPS but this is the only way they come).
4. They usually came attached to convertibles as a sweetener.

There seems to be some possible edge in these considering they are not exchange traded. This also means significantly less liquidity.

Is there anyone still trading these issues? What purpose would someone want a warrant over a LEAPS? Who is trading them?

 

[OptionsOptionsOptions]

This isn't the 1980's

 

[gaussian]

This isn't the 1980's

Man thanks for the great feedback. Life changing advice here.

But seriously, I asked an honest question. I trade options. I was just curious if there was anyone here (and I'm sure there are) who has some insight on this. Who knows, there could be some benefit to buying a contract off a company instead of on an exchange like CBOE.

 

[elt894]

I've never traded a warrant but looked into it a few years ago. A couple things I remember sticking out:

If a warrant isn't exercisable you can sometimes call the company and ask them to change it.
https://www.stockwarrantshq.com/comprehensive-stock-warrant-trading-guide/

The company can change the terms of the warrant to make them more favorable to exercise, which would hose you if you're short.
https://www.stockwarrantshq.com/shorting-warrants-cool-dont-do-it/

 

[ETJ]

We occasionally trade them as part of the convertible arb. book. They are different from options as they can rarely be borrowed to short and they are frequently overpriced. Mostly in Asian names. Very popular as a debt sweetener and where bank prop. desk dominate the market. Some in the EU, but everybody is concerned about accessibility post Brexit.

 

[zdreg]

I've never traded a warrant but looked into it a few years ago. A couple things I remember sticking out:

If a warrant isn't exercisable you can sometimes call the company and ask them to change it.
https://www.stockwarrantshq.com/comprehensive-stock-warrant-trading-guide/

The company can change the terms of the warrant to make them more favorable to exercise, which would hose you if you're short.
https://www.stockwarrantshq.com/shorting-warrants-cool-dont-do-it/

To extend the life of the warrant, terms of exercise were changed near expiration. Then the short squeeze happened. Or as the great observer of human life, yogi berra, once said it ain't over till it is over.