Warrant

A warrant gives the holder the right, but not the obligation, to buy a company's stock at a set strike price before a set expiration date, similar to a call option. The key difference is that a warrant is issued directly by the company itself, and exercising it creates new shares, diluting existing shareholders, rather than transferring existing shares between two traders the way an option does.

Warrants are commonly attached to SPAC deals, distressed-company financings, and some bond offerings as a sweetener to make the deal more attractive to investors, giving them upside participation on top of whatever the base security pays.