GREY:NMKEF - Post by User
Comment by
francoiscnon May 16, 2018 2:42pm
117 Views
Post# 28040988
RE:RE:RE:RE:RE:RE:RE:RE:SOFTBANK-BOND-NORTHVOLT!
RE:RE:RE:RE:RE:RE:RE:RE:SOFTBANK-BOND-NORTHVOLT!Ya you don't get it :)
It has a $1.50 strike with expiry in july 2019. Which means you need to get the warrant (30c) right now and you will have the right to buy shares for an additionnal 1.50 anytime until july 2019.
So basically you're paying ahead of time 30c in the hope that shares will be worth more than 1.50+0.30 = 1.80 in the future (before july 2019). So if shares go back to $2, you essentially made 20c off a 30c investment in that scenario.
Some people are willing to buy them "out of the money" which means that the strike (1.50) is above the current share price because they truly believe that 1.50 + the premium of the warrant (30c) will be beat before their expiry in 2019. The advantage is leverage, you can buy much more warrants than you can buy shares. The risk is however higher, if we keep going down those warrants will expire worthless vs shares that will just lose a percentage