Undetachable Stock Warrant

We're not talking warrants here like...cops with battering rams busting down your door and rifling through your stuff. These warrants have to do with financial securities.

A warrant grants the holder the right to buy a security (like stock) under certain pre-set conditions. So like...a company issues you a warrant to buy 1,000 shares of stock at $20 a share. The stock is currently trading at $15. Obviously, you're going to hold onto that warrant until shares get above $20. Sometimes, these warrants are part of another security, usually something like a bond. You buy a bond paying an 8% return. It also contains a stipulation that allows you to buy 1,000 shares of stock at $20 a share.

The warrant is like a sweetener for the bond. You're loaning the company money, but the warrant gives you the ability to acquire equity in the future, if the conditions are right.

Sometimes, these warrants can be removed from the underlying bond and sold separately. You decide that you like receiving the 8% interest from the bond...but the stock's been stuck between $15 and $18 for a long time. You're tired of waiting, so you sell your warrant to another investor. You'll take some cash now. You keep the bond, but sell the warrant. That situation is called a detachable warrant. The two things are separable.

As you've probably guessed, an undetachable warrant is the other kind. The bond and warrant are like conjoined twins attached at the brain stem...no way to separate them. You can sell the bond with the warrant (the two get sold together), but you can't keep one and sell the other. They're a packaged deal.