warrant premium

Warrant Premium

The amount by which the price of a warrant exceeds the value of its underlying stock. A warrant is a document attached to a security giving the holder the right to buy more shares of the same security at a certain price on a certain date. If, for example, a warrant allows one to buy 10 shares at $5 each (for a total of $50) but the warrant is trading at $60, the warrant premium is $10. The warrant premium usually declines as the warrant approaches its expiration date.

warrant premium

The excess of a warrant's market price over its minimum value in exchange for shares of common stock. For example, a warrant to purchase 3 shares of stock at $10 each has a minimum value of $45 if the shares trade at a price of $25 (3 × [$25 - $10]). If the warrant has a market price of $55, the premium will be equal to $10 ($55 - $45). Although a warrant usually trades at a premium, the size of the premium declines as its price climbs and as it approaches expiration.
References in periodicals archive ?
A diagnostics device designed and proven to quickly and accurately diagnose a disease or condition brings significant economic value that may warrant premium pricing.
An orthopedic device designed and proven to reduce surgical site complications offers significant economic value that may warrant premium pricing.
In addition to this, warrants (and other options) also possess a time (or speculative) value, which is often called the warrant premium.
In addition to the fundamental value of the warrant, as determined above, bear in mind that the warrant will also have some additional value attributable to the speculative value, or warrant premium.
This difference between the fundamental value of a warrant and its market price is known as warrant premium.
Considerable research and testing was conducted by HBP prior to product development - aimed at drawing in new customers; assisting retailers in providing added-value for shoppers; tempting new and existing bakery items; and providing more premium items that warrant premium pricing.
For the purpose of increasing participation in the incentive programme, the company intends to subsidise the holders of warrants who are still employed by the Betsson group when the warrants are exercised by way of a bonus payment, which before taxation amounts to the warrant premium.