GREY:BZAMF - Post by User
Comment by
UserErroron May 30, 2018 12:36pm
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Post# 28099837
RE:RE:RE:RE:RE:RE:Crickets here
RE:RE:RE:RE:RE:RE:Crickets hereCrimson already answered but I'll add to it. The easiest way to think about it is when you switch your thinking to percentage return. Let's say that there is no premium at all and the warrants always trade at exactly what their intrinsic value is (share price - exercise price).
Example:
TGOD Commons = $5.00
TGOD Warrants = $2.00 (assuming $3.00 exercise price)
If the commons go up by 50 cents, then that's a 10% gain on an investment made in the commons. If you had bought the warrants, they would now be worth $2.50. That is a 25% gain on your investment.
That's what gearing/leverage is with warrants and it's why someone would pay a premium.
The inverse would be if the share price drops to $3.00 for the commons. You would lose 40% of your investment if you're in the commons, but you would lose 100% in the warrants. More risk, more reward.