What Is the Fundamental Difference between a Warrant and a Standard Call Option?

The fundamental difference lies in their origin and effect on the issuing company. A standard call option is a contract between two investors, and its exercise does not affect the issuing company's capital structure.

A warrant, however, is issued by the company itself, often in conjunction with a bond or stock offering. When a warrant is exercised, the company issues new shares, diluting the ownership of existing shareholders.

Warrants typically have much longer expiration dates than standard options.