RE:RE:RE:CENOVUS ENERGY INC WT 1/1/26 (CA: CVE.WT) explained??The warrant is a right. You can sell that right. It has market value, It is not a cost.
But if you want to exercice you need to come up with the money.
So for example, you possess 1000 warrants.
a) you sell the warrants at 3.50$. You have 3500$ 'profit' if you got them at 0$
b)you call your broker and say 'hey broker I got 6540$ to invest, take it and give me 1000 CVE worth 7.83$. You sell afterwards the CVEs for 7830$ and pocket 1290$.
Option A is better.
c) CVE goes up and up and up and let's say it trades at 25$ in 2022. The warrants would be trading at 25 minus 6.54 + time value (around 2$), so around 20$ SO if you BUY the warrants today, you will make 6 times your money, while buying the commons the commons you will make 3 times. This is called leverage.
I hope it's clear