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Warrants are typically issued by companies, although they can also be issued by third parties, explains Don Chance, a finance professor at Virginia Tech's Pamplin College of Business. Companies often issue warrants as a "sweetener" to a bond or preferred stock offering, thus lowering the interest rate they have to pay.

Another big difference between a warrant and a call option is the duration of the contract. While warrants tend to have expiration dates that can extend as far as 15 years, your typical stock option tends to be much shorter, say, a matter of months.