Warrants are interesting for sure. If one sound
Post# of 32979
(Total Views: 641)
Posted On: 01/05/2020 1:12:58 PM
Re: Poseidon360 #17985
Warrants are interesting for sure.
If one soundly believes VERB will go above the strike price before the expiration, then one may also believe that, is not a risk factor for them or a small one.
Right now, that is more than 4 years away before they expire which is a long way off and lowers the risk
Obviously if VERB didn't go above $3.43 in that time span, you would lose 100% of your investment where if you bought VERB now and it went up to $3, you would have some real gains.
At a strike price of $3.43 for the initial warrants, the sp is now 1/2 way there which derisk warrants by a more significant amount then when the sp was .72 and only 21% of the way at that time.
One over $3.43 and if one believes the sp would never go back below it, all the risk for that one person based on their beliefs and risk tolerates would all go away.
This is an important point. The risk for warrants changes significantly in my opinion as the sp of VERB gets closer to the strike price.
Once over the strike price, institutions may exercise which would give VERB a lot of cash they anticipate getting at some point in the next 4-ish or less years.
For individual investors, hanging onto those warrants may provide one with a great leveraged investment if one doesn't plan on getting totally out of VERB.
By leveraged, I mean you didn't have to put up 100% of the cost to own. Now it VERB went up to say $10, $20, $50 or more, an investor may also feel more comfortable investing more into the company since they have the warrant potential gains as a hedge.
As I said, warrants, the possibilities and investment strategies I think are more varied than plain stock investing. It does make one think.
Something else to think about. Previously the only ones selling warrants were institutions or accredited buyers that bought in the PO. What seems to have stopped a while ago. Why would they sell now with the SP going up?
Now what happens if institutions want to buy into warrants at some point if they feel they are undervalued?
Up to everyone to determine was is undervalued, overvalued or at fair value.
All I can say is at least a dozen people here have seen the Morningstar report that says fair value right now as of Fridays close is $4.14 and that is above the strike price of the initial warrants.
If one soundly believes VERB will go above the strike price before the expiration, then one may also believe that, is not a risk factor for them or a small one.
Right now, that is more than 4 years away before they expire which is a long way off and lowers the risk
Obviously if VERB didn't go above $3.43 in that time span, you would lose 100% of your investment where if you bought VERB now and it went up to $3, you would have some real gains.
At a strike price of $3.43 for the initial warrants, the sp is now 1/2 way there which derisk warrants by a more significant amount then when the sp was .72 and only 21% of the way at that time.
One over $3.43 and if one believes the sp would never go back below it, all the risk for that one person based on their beliefs and risk tolerates would all go away.
This is an important point. The risk for warrants changes significantly in my opinion as the sp of VERB gets closer to the strike price.
Once over the strike price, institutions may exercise which would give VERB a lot of cash they anticipate getting at some point in the next 4-ish or less years.
For individual investors, hanging onto those warrants may provide one with a great leveraged investment if one doesn't plan on getting totally out of VERB.
By leveraged, I mean you didn't have to put up 100% of the cost to own. Now it VERB went up to say $10, $20, $50 or more, an investor may also feel more comfortable investing more into the company since they have the warrant potential gains as a hedge.
As I said, warrants, the possibilities and investment strategies I think are more varied than plain stock investing. It does make one think.
Something else to think about. Previously the only ones selling warrants were institutions or accredited buyers that bought in the PO. What seems to have stopped a while ago. Why would they sell now with the SP going up?
Now what happens if institutions want to buy into warrants at some point if they feel they are undervalued?
Up to everyone to determine was is undervalued, overvalued or at fair value.
All I can say is at least a dozen people here have seen the Morningstar report that says fair value right now as of Fridays close is $4.14 and that is above the strike price of the initial warrants.
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