What is the Difference between Warrants and Options? Which should you give to employees?

In this short video, we are talking about the difference between warrants and options. This is another common misconception and I'm hoping to clarify it once for all.

You've probably heard of getting stock options just like you might be familiar with buying an option or selling an option on a house.

You might also be familiar with getting warrants in a company related to compensation or as a bonus when doing a private investment.

They seem the same so what's the difference?

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Author: Michael Rosmer

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[dmullinsTWM]

There is no vid length minimum required to provide an epiphany. This vid did so in just a couple of minutes. Well done.

[mustardchef]

Great video. I got the impression that this was the difference while reading "Venture Deals" (Feld/Mendelson) and this is the first place I found that confirmed that suspicion. Cheers!

[hiramgonzalez]

Great video. Simple and easy to understand!

[onetry]

I'm having trouble imagining where the value lies in receiving a warrant as a performance incentive. If it's a new share doesn't that just mean it's issuance has diluted the value of the previously existing shares? How is that used as an incentive?

[patrickwerz]

Hi, if a tech startup gives me a wararnt with an underlying share value of e.g. 4k $. What does this imply? Can I buy shares after IPO for 4k $. That doesn't sound like a huge benefit, or am I missing something? Is there a value leverage I don't see? Thanks, in advance

[MrKILLUMINAT]

I've seen your videos (which are great) and I think you said you were from Canada before. I was wondering, why do they allow covered calls (selling calls on shares that you own) but don't allow selling cash secured puts (selling puts with cash ready if assigned) on a TFSA?

[jaolagues]

This guy does not understand how warrants or options work