A warrant is a contract that gives the warrant holder the right to purchase capital stock of a corporation. A warrant will specify an exercise price, which is the price at which the warrant holder can purchase the stock underlying the warrant, and a number of shares that can be purchased. Warrants are very similar to options. A distinction that is often made is that warrants give the holder to purchase newly issued stock directly from the corporation while options give the holder the right to purchase shares already outstanding. However, employee stock options are more like warrants under that defintion, as they normally entitle the employee to purchase newly issued shares directly from the company.