In what way are warrants typically traded?

Warrants are typically traded through over-the-counter (OTC) markets, which allows for more flexible trading arrangements and the ability to negotiate terms directly between parties. This is primarily due to their unique nature and the fact that they are often issued by corporations themselves, making them less standardized than other financial instruments traded on organized exchanges.

In the OTC market, trading is less centralized, and transactions can involve customized contracts tailored to the needs of the parties involved. This flexibility can accommodate varying terms associated with different warrants, which may not fit neatly into the rigid structure of organized exchanges.

The other trading options for warrants, such as using organized exchanges, standard contracts, or treating them as commodities, do not capture the essential characteristics of warrant trading. While some warrants may eventually find a marketplace on exchanges, particularly if they are widely issued and sought after, the fundamental mechanism for their trading remains predominantly in the OTC space where bespoke agreements can be made.