Does anyone know when the last day is to buy warrants?
Also am I understanding correctly that warrants are almost “free money” given that you can buy them for 27.70 and then I believe 11.50 a share at a later date when it is trading at 66 a share? Or is there still risk involved?
This is my first time ever having warrants so I want to get a professionals understanding of it if possible!
That's called Arbitrage
Well except here the product is slightly different (warrant vs share) and the value gap seems very wide when most arbitrage opportunities aren't that fat.
So what OP and I are trying to understand is why this arbitrage opportunity seems so rich? Seems like we are missing something given that it is not an obscure name.
Taxes are to be figured in but I'm doing all my DWAC investing in the 401k realm so things are simplified.
I expect as we get closer to the date when the exercise window begins, that the price gap between shares and warrants will lessen.
Once we reach that date, then the price gap should finalize to warrants trading for $11.50 less than shares, or within pennies of that.
I believe that exercise window opens 30 days post merger, but I’m unsure if that’s calendar days, or trading days. Tomorrow will not be a trading day, as the market is closed in observance of Good Friday.
I have 4x as many warrants as I do shares, so I’m sitting tight until the price gap closes.
EDIT: I didn’t really answer the question of WHY the price gap is currently so large. I suspect the average retail buyer isn’t even aware of the warrants, and big $ Wall St. investors are waiting to see if the corrupt short sellers can tank the stock before the exercise window opens.
EDIT 2: I just read the Reddit link at the top of the comments here, and it does a great job of explaining things. Unfortunately, according to that article we will be waiting longer than 30 days, and more like two months.