A type of equity grant similar in concept to stock options but usually granted to investors, investment banks, and other nonemployees. As with stock options, warrants allow the owner to purchase a specified number of shares during a given period at a set price. Unlike stock options, they are often freely transferable. Generally, warrants are not compensatory for tax purposes. If they are granted in exchange for services, they are really stock options and incorrectly referred to as "warrants."