A lot of this was discussed back in April and May
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Posted On: 12/17/2019 11:32:44 PM
Re: Jumperfish #17806
A lot of this was discussed back in April and May but I'll give you my take.
But I'd recommend you search the web vs. what you read on a message board for your final decision
If you buy stock. You own stock. If it stays the same price for the next 10 years.
You didn't gain anything or lose anything.
If it goes up 10x you gain 10x.
Warrants are more like options.
If the stock doesn't reach the strike price, by the expiration, you lose everything.
If it goes up to $10, you did pretty, pretty good, but you still have to buy the shares at the strike price or trade it. Not a big deal and a good problem to have.
There are financial models that will tell you more.
One of the key variables is, what you can borrow money for.
If you can't and don't mind the risk of losing everything if a stock doesn't reach the strike price, then it may be a good deal.
In general, the market does factor in a borrow rate. When I did the calculations a a while back, if you could borrow money for less than 10%, buying stock was a much better deal.
If you couldn't, warrants might be.
I haven't done the calculations in 9 months, but just my two cents.
A lot of people don't get how borrowing money can be better than warrants
A lot of people do get, that maybe you should never invest more than you can afford to lose, let alone borrowing.
Full disclosure: I bought almost 100K of warrants this week as I believe they are undervalued based on the ratio of warrant to sp but what do I know.
BTW, I can borrow money pretty cheap
But I'd recommend you search the web vs. what you read on a message board for your final decision
If you buy stock. You own stock. If it stays the same price for the next 10 years.
You didn't gain anything or lose anything.
If it goes up 10x you gain 10x.
Warrants are more like options.
If the stock doesn't reach the strike price, by the expiration, you lose everything.
If it goes up to $10, you did pretty, pretty good, but you still have to buy the shares at the strike price or trade it. Not a big deal and a good problem to have.
There are financial models that will tell you more.
One of the key variables is, what you can borrow money for.
If you can't and don't mind the risk of losing everything if a stock doesn't reach the strike price, then it may be a good deal.
In general, the market does factor in a borrow rate. When I did the calculations a a while back, if you could borrow money for less than 10%, buying stock was a much better deal.
If you couldn't, warrants might be.
I haven't done the calculations in 9 months, but just my two cents.
A lot of people don't get how borrowing money can be better than warrants
A lot of people do get, that maybe you should never invest more than you can afford to lose, let alone borrowing.
Full disclosure: I bought almost 100K of warrants this week as I believe they are undervalued based on the ratio of warrant to sp but what do I know.
BTW, I can borrow money pretty cheap
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