What is the difference between a stock option and a stock warrant?

What is the difference between a stock option and a stock warrant Introduction: The World of Equity Instruments Hello, and welcome to our video on the distinctions between stock options and stock warrants. In the realm of finance, equity instruments play a pivotal role. They provide individuals with opportunities to participate in a company's growth and success. Two such instruments, stock options and stock warrants, are often employed by both companies and investors. While they may seem similar at first glance, there are significant differences that one must understand. So, let's dive in! Defining Stock Options: A Closer Look Stock options are essentially contracts that grant the holder the right, but not the obligation, to buy or sell a specific number of shares at a predetermined price, known as the 'strike price,' within a specified time frame. These options are typically offered to employees as part of their compensation packages or to investors as a means of incentivizing their involvement. Stock options can be categorized into two types: 'call options,' which provide the right to buy shares, and 'put options,' which grant the right to sell shares. Understanding Stock Warrants: A Comprehensive Overview Similar to stock options, stock warrants are also contracts that confer the right to buy or sell shares at a predetermined price. However, there are a few key distinctions. Firstly, stock warrants are often issued directly by the company, whereas stock options are usually granted by the company to its employees or investors. Additionally, stock warrants typically have a longer lifespan compared to stock options, often ranging from several years to even decades.