RE:Question for the pros here.I own almost all warrants.
If your belief the stock price is going to rise to lofty levels between now and Aug 2024 the warrants give you increased leverage versus owning shares.Typically I have sold shares and bought warrants when the ratio of warrants to stock is 2:1 or greater which is the case in the relative prices you note.
The current warrant price has an intrinsic value of 0.04 and a time value of (0.185-0.04) or 0.145; the former increases as the stock price rises and the latter declines as we approach expiry of the warrant.
At a 2:1 ratio [share price 0.39 and warrant price of 0.195] the breakeven or indifference point is a stock price of 0.70 by August 2024. The warrants would have an intrincic value of (0.70-0.35) or 0.35 each
So if you had bought a single share at 0.39 it would grow to 0.70 for a profit of 0.31/share. Each warrant would have an intrinsic value of 0.35 and zero time value for a profit of 0.155/warrant and since you would have 2 your total investment gain would be 0.31; the same as owning the share.
In this example your breakeven is 0.70; any share price above 0.70 favours owning the warrants and anything less favours shares.
At $1 for instance your share profit would be (1.00 - 0.39) or 0.61 while the warrants profit would be [2*(1.00-0.35)]-0.39 or 0.91 The ratio at this point would have narrowed to 1.54:1
SInce the warrants trade slightly differently than the share price opportunities of buying better than 2:1 exist. In a hot market last year the reverse occurred. When the stock hit its high of 0.48 the warrants went for 0.30 a ratio of only 1.6:1
I feel that there is a great chance we will see at least 0.70 this year and more than $1 next year so warrants seem like the logical vehicle to participate. I dont anticipate ever exercising them. At expiry I will simply sell them and buy stock at a much lower share to warrant ratio than when I bought them; i.e., well under 2:1