Warrant

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Brook Illg
Brook Illg's picture
Warrant

this is your explanation of the risk:
The Risks of Buying a Warrant and of Buying the Underlying Stock
When a stock price rises, the price of a warrant for the stock often rises more steeply. The rise of the warrant price can be two, three, or more times the increase in the stock price. When a stock price decreases, however, the drop in the warrant price is often more extreme. The warrant may even become worthless.

i didn't quite get the process that makes the warrant prices rise less then the stock but drop faster/