I don't fully know what I'm talking about. So, don't take this a 100% correct. I hope others weigh in to correct me and fill in the gaps.
Assume you bought 1,000 warrants @$10 ($10,000) and say DJT goes to $100. You can exercise your warrants for, I believe, $11,500.
Your stock will be valued at $100,000. You'll have to pay taxes on it as income tax. I don't know exactly how that tax is calculated, but it is still "free upside". Probably not in simple terms, but I believe so, if the gap is significantly larger than $11.5. I think the exact answer depends on how the income tax is calculated, which i don't quite know.
Excluding the idea of selling and accounting for capital gains, I think it's correct to say your bottom line is $100,000 - $10,000 (cost of warrants) - $11,500 (exercise cost) - (whatever is taxable income) = 78,500 - (whatever is taxable income). Again, I don't know how the "income tax" is calculated, but conservatively, let's say it's 25k. Your unrealized gains (using this term loosely) is maybe ~$53,500
Now assume that DWAC was 40 at the time DWACW was 10. Your 10k would have bought you 250 shares. So, if DJT were @ $100 now, your value would be $25,000. Unrealized Gains(loose terminology) would be $15k vs the warrant scenario of ~53k. if it were 33, that's ~333 shares, so 33,300k @100/share ... So 23.3k vs 53k.
Calculating capital gains (short or long) for either of those cases is something to consider and would impact the above picture.
I don't fully know what I'm talking about. So, don't take this a 100% correct. I hope others weigh in to correct me and fill in the gaps.
Assume you bought 1,000 warrants @$10 ($10,000) and say DJT goes to $100. You can exercise your warrants for, I believe, $11,500.
Your stock will be valued at $100,000. You'll have to pay taxes on it as income tax. I don't know exactly how that tax is calculated, but it is still "free upside". Probably not in simple terms, but I believe so, if the gap is significantly larger than $11.5. I think the exact answer depends on how the income tax is calculated, which i don't quite know.
Excluding the idea of selling and accounting for capital gains, I think it's correct to say your bottom line is $100,000 - $10,000 (cost of warrants) - $11,500 (exercise cost) - (whatever is taxable income) = 78,500 - (whatever is taxable income). Again, I don't know how the "income tax" is calculated, but conservatively, let's say it's 25k. Your unrealized gains (using this term loosely) is maybe ~$53,500
Now assume that DWAC was 40 at the time DWACW was 10. Your 10k would have bought you 250 shares. So, if DJT were @ $100 now, your value would be $25,000. Unrealized Gains(loose terminology) would be $15k vs the warrant scenario of ~53k. if it were 33, that's ~333 shares, so 33,300k @100/share ... So 33.3k vs 53k.
Calculating capital gains (short or long) for either of those cases is something to consider and would impact the above picture.