Difference Between Various Option Types

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Options vs Warrants

Differences Between Options vs Warrants

  • An option is a contract between 2 parties giving the holder the right but not the obligation to buy or sell an underlying asset at a pre-decided strike price and a fixed date in the future as well.
  • On the other hand, a stock warrant is on similar lines like a stock option since it gives the right to purchase a company’s at a specific price and date. However, a stock warrant is issued by the company itself and additional new shares are also issued by the firm for the purpose of the transaction.

In this article, we discuss the differences between Options and Warrants in detail.

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Options vs Warrants Infographics

Let us understand the differences between Options vs Warrants through an infographics

Options vs Warrants – Similarities

Both Options vs warrants are treated on similar lines and include the following similarities:

  • Both instruments offer the holders an opportunity to enhance their exposure and take advantage of the stock market movements without possession of the asset.
  • They confer on their holders the right to purchase a specific quantum of the principal asset at a fixed price and specified date.
  • Both represent a right and not any control over the principal asset unless it has been exercised.
  • Factors influencing the value of an option or a warrant are the same such as the Underlying stock price, strike price or the Exercise price, Time to expiry, Implied volatility and risk-free interest rate.
  • Both have the same components in terms of pricing i.e. Intrinsic Value and Time Value of money. It is to be noted that
    1. Intrinsic value is the difference between the price of the principal stock and the exercise or strike price. This value can be Zero but never negative.
    2. Time value is the difference between the price of the option/warrant and its intrinsic value.

Options vs Warrants – Differences

Despite the above, there are the following differences between Options vs Warrants in detail:

  1. The option is an agreement wherein buyers possess the right but not the obligation to buy or sell stock at a specified price and date. Conversely, a warrant is an instrument registered to provide the buyer the right to get a specified number of shares at a pre-decided date and prices.
  2. Options are standard contracts and are required to adhere to rules governing maturity, duration, size of the contract and exercise price, whereas warrants are securities (non-standardized) making it flexible.
  3. Options are issued by the exchange such as U.S. Chicago Board Options Exchange whereas warrants get issued by a specific company.
  4. A stock option is a secondary market instrument as trading takes place between investors whereas a warrant is a primary market instrument since it is issued by the company itself.
  5. In options trading, the selling party writes the options while warrants have a single issuer responsible for the rights offered.
  6. The maturity period also differs with options having till 2 years and warrants having a maturity of 15 years.
  7. The underlying assets with respect to options are Domestic shares, bonds, and indices whereas warrants shall have securities such as Currencies and international shares.
  8. In terms of making a profit, the company does not receive any direct benefit which ultimately is passed on to the investor. Conversely, the issue of warrants is to encourage the sale of shares and offer a hedge against fall in the value of the firm which can lead to a dip in the share price of the company.
  9. Options do not involve the issuance of new stock but warrants result in dilution creating issuance of new stock.
  10. Trading in options involves following principles of a futures market and warrants follow the principle of cash markets.
  11. Options can be issued independently but warrants are combined with other instruments such as bonds.
  12. The taxation rules applicable will differ. Stock options are subject to rules governing compensatory items. Warrants, on the other hand, are not compensatory in nature and hence taxable in nature.
  13. Options can be bought/shorted/written involving multiple trading and hedging strategies whereas warrants cannot be easily sold. They are largely used by speculators for stock replacement due to possible hedging.
  14. Margin calls are applicable in options since minimum balance is required for options trading but not so in case of warrants.

Options vs Warrants (Comparison Table)

Basis of comparison between Options vs Warrants OPTIONS WARRANTS
Meaning Buyer has the right to buy or sell the underlying asset at a predetermined price and date Instrument giving the holder the right to get a specified number of shares at a predetermined price and date.
Nature Standardized Contract Non-standardized security
Underlying Asset Domestic shares, Bonds and various indices Currencies and International shares
Issuer Options Exchange Issued by a specific company
Ownership Employees Investors, Companies or Partners
Terms and Conditions Set by the equity exchanges Set by the issuer
Type of Products Equity and Index Calls/Put Various capital guaranteed investments and other high risk/return trading warrants
Lifespan Equity – till 5 years and

Index – till 18 months Between 3 months – 15 years Dilution Does not involve the issuance of new stock Results to dilution

Conclusion

In a nutshell, both these derivatives are essential for business permitting investors to consider investing in the stock without holding the security. The minute details of both instruments need to be studied and accordingly weigh the pros and cons for the same before considering the final decision from a financial perspective. Options can be considered as a compensation mediator whereas warrants are targeted towards aiding the firm in raising capital, debt or equity securities and improving the deal for investors. Both instruments have their level of risks and investors have to carefully understand the derivatives and consider the tax consequences before making use of them.

The risk appetite and long-term financial objective of the investor have to be assessed and maintain caution accordingly. Warrants are highly leveraged and speculative instruments and hence cautious approach should be taken and in contrast, options involve less risk with high growth potential with a limited capital requirement.

This has been a guide to the top differences between Options vs Warrants. Here we also discuss the Options and Warrants with examples, infographics, and comparison tables. You may also have a look at the following articles for gaining further knowledge in Derivatives –

Difference between various Radiant Barrier types

Can someone explain me the difference between radiant barrier types and which one is the best option?

I am seeing products like foil, Double Insulated Metalized Mylar Double Foil Bubble Wrap.

I do not understand the difference between them if there is any.

1 Answer 1

Radiant barriers are great in theory, but in practice they usually fall short. The primary reasons are:
1. Once they get dusty, they don’t work. 2. People press them right up to the surface they are trying to insulate (and air cavity between the radiant barrier and the next closest surface is necessary – at least 3/4″).

Adding a radiant barrier to an existing form of insulation can’t hurt, but as a stand alone product I usually find their effectiveness lessens substantially over time. So to answer your question: Unless you have a specific need where radiant barriers can perform, I wouldn’t spend a lot of effort or cost seeking one out.

Not the answer you’re looking for? Browse other questions tagged insulation attic or ask your own question.

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Difference between various data types

quite newbie question: in RM5, which is the difference between “numeric” and “real” in defining metadata? Where could I find a quick help on topics like these? the “rapidminer-5.0-manual-english_v1.0.pdf” and “rapidminer-4.6-tutorial.pdf” does not talk about these simple subjects.

Answers

Hi,
actually numeric is the supertype of real and integer.
The same is nominal for polynominal, text and binominal.

Thanks. Does some of the documentation specify this? Or it is supposed that I should read the code

Hi.
unless you want to take a look into the manual, that would be a perfect idea. Anyway I would think reading the manual until page 12 is more easy.

Sebastian,
I have read the page 12 of the manual, and I can’t see a difference between both, nominal and polynominal. Because both can handle categorical values. I mean, if you have the variable “color” (red, green and blue), you’ll have a categorical variable, and therefore a nominal variable, is it not redundant the “poly” prefix?
What would be the difference, alghorithmically speaking, between them ? (the same for numerical)

Thanks in advance.
Pablo.

you are right: from an algorithmic point of view there is currently no difference between “polynominal” and “nominal”. As far as I know, all operators which can handle one of both can automatically handle both (please correct me somebody if I forgot an operator where this would indeed make a difference). But who knows: Maybe there is such a difference later on for a new operator and the used ontology can be seen as a preparation for that. However, in today’s practical processses you will be perfectly fine by using one of both options and just make sure that all operators are happy

The same is true for numerical value types although I think that there actually are (or at least: was) some algorithm which really has relied on the fact that the input has to be “real” instead of “numerical”.

Ingo Mierswa wrote:
Hi Pablo,

you are right: from an algorithmic point of view there is currently no difference between “polynominal” and “nominal”. As far as I know, all operators which can handle one of both can automatically handle both (please correct me somebody if I forgot an operator where this would indeed make a difference). But who knows: Maybe there is such a difference later on for a new operator and the used ontology can be seen as a preparation for that. However, in today’s practical processses you will be perfectly fine by using one of both options and just make sure that all operators are happy

The same is true for numerical value types although I think that there actually are (or at least: was) some algorithm which really has relied on the fact that the input has to be “real” instead of “numerical”.

Cheers,
Ingo

Hi,
actually I doubt this because each Polynomial attribute is a nominal attribute.
I think you are trying to compute the distance between “mule” and “donkey”. What is the distance? There’s only one sane answer: 1. And whats the distance between “mule” and “horse”? Yes, 1. “mule” and “mule” would be zero, if you don’t have already guessed.

RapidMiner currently provides only this distance measure between nominal values. So I doubt a process comparing wordlists per row does make any sense at all?

hi sebastian, thanks fir your answers, in both of the threads, yes indeed this would help if all permutations are calculated, therefore each row of vector a with each row of vector b. in the optimal case the operator which i am looking for would give me a 1 in the case of a match a zero otherwise. is there something like this? because i am looking for a, to follow your example, a mule-mule match! i have tried cross distances and but the results are completely strange; even if there should be a match, seen by comparing the lists myself, it gives me a 1 distance. so i guess i am not handling this operator right.

best regards, andre

Ingo Mierswa wrote:
Hi Pablo,

you are right: from an algorithmic point of view there is currently no difference between “polynominal” and “nominal”. As far as I know, all operators which can handle one of both can automatically handle both (please correct me somebody if I forgot an operator where this would indeed make a difference). [. ]

Cheers,
Ingo

I indeed noticed an operator where the distinction between nominal and polynominal makes a differnce. I am often building web mining processes where extracted data is incrementally written to a database (appended to a table). The same process is repeated after a few days to collect data that was missed during the first run (timeouts etc.) and recently added contents.
To find only those examples I import the relevant URLs (Read Excel) and load the already collected items from database (Read Database). Both operators are followed by “Set Role” to set IDs. Finally the “Set Minus” operator builds the desired example set. The attribute obtained from database is usually nominal and the one from the Excel file is of type polynominal. Process execetuion is interrupted as the “Set Minus” operator complains about incompatible types and requests an attribute of type polynominal. Since there is no convenient way of changing the attribute obtained from database from nominal to polynominal, I always set nominal instead of polynominal for the “Read Excel” operator. Doesn’t mean much trouble for me, but shows a case where there is a difference between both types. I don’t know if it is necessary there.

What is the difference between various types of ‘Embedding’ of a form?

Что такое JotForm?

JotForm is a free online form builder which helps you create online forms without writing a single line of code.

At JotForm, we want to make sure that you’re getting the online form builder help that you need. Our friendly customer support team is available 24/7.

We believe that if one user has a question, there could be more users who may have the same question. This is why many of our support forum threads are public and available to be searched and viewed. If you’d like help immediately, feel free to search for a similar question, or submit your question or concern.

Why do you not want to answer this thread?
(Your answer will be sent to Jim and Aytekin)

I don’t understand how to make the link on my website to the various types of ‘Embedding’ of the form other than the standard ‘Embed’.

i.e. ‘Pop-up’ ‘Lightbox’ etc.

I have created a section under my website to test how the EMBEB types works, you can take a look at it here JotForm Embeb types

I hope this answer you question.

If you need help regarding how to implement any of the EMBEB types feel free to ask i will happy to help.

That is certainly a good way to see the difference, and thank you for that Huberson.

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Now since there is visual, I will try to explain the same with words.

You could say that there are 2 categories of the embed options:

1. forms that get shown from a button – lightbox / feedback / pop-up and

2. forms that are embedded directly into the body – iframe embed, embed (js embed), source code embed

LightBox embed is often used if you wish to show a form within the same window when the page loads or after the user clicks on specific field, etc.

Feedback embed is quite similar to lightbox, but it is often shown on the form in a form of a button – such as in Huberson’s example, being orange button on the left.

– What both of these have in common is that once they open, the rest of your website is “locked” as you can only see the form, so it is often used for signups to email newsletters and similar.

Pop-up embed code is great if you want to have the form shown, but in the same time to make the website shown as before. So online the above two methods of embedding it will open up a popup to show you the form. This is great for forms that might need to be filled out with some data from the website as well – for example if you explain all the themes and events available in Disneyland and you offer various purchase options for the same on your form, this would be a great way to allow everyone to read what they want and quickly make decision on their forms.

Now embed or also known as js (javascript) embed code is a great way to embed a dynamically adjusted form on your website. It will capture the full available width and show the form within it and alter its height as needed.

This as the following embed codes are great when you want your form to be part of your website – actually take some space in it. This creates a more welcoming feeling to the form as it is seen as direct part of your website.

The only downside of the js embed code is that sometimes it can be affected by other javascript code on your website and not work properly.

Iframe embed code is as it suggests, your form within the iframe. It is followed by the javascript code that also adjusts its height as in js embed code, but the iframe embed can not be influenced by other codes on your website and as such is a recommended way to embed your form if you are using many plugins on your website.

Source code embed is the best option if you want to make your own edits to the form. While it could be broken by other code on your website and even influenced by CSS of your own website, it is the only way to go if you need to add some extra functionality to it.

This is often used for rare cases where form builder can not create something, while your developers can – such as retrieving data from within your database to add it up to the form, and similar.

Now hopefully you will have a clearer picture of what each is about when you read this and check out the samples provided by Huberson, but if you have any questions, do let us know and me and my colleagues would be happy to assist :)

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