warrant premium investment & finance definition

The excess of a warrant's market price over its minimum value in exchange for shares of common stock. For example, a warrant to purchase 3 shares of stock at $10 each has a minimum value of $45 if the shares trade at a price of $25 (3 × [$25 - $10]). If the warrant has a market price of $55, the premium will be equal to $10 ($55 - $45). Although a warrant usually trades at a premium, the size of the premium declines as its price climbs and as it approaches expiration.