RE:The Vacuum CleanerI am in agreement with you on the leverage of warrants from an investment standpoint. My preference is for the B series warrants....Strike price of $2.21/shr and current cost of $1.73/warrant giving an investment cost of $3.94/shr.
My problem with the A series is 2 warrants + $5.50 equals 1 share. The current premium is, as you said, is $0.40 per warrant indicating a single share cost of $6.30. That would be your break even point.
At $6.30 per share the B series warrants would be valued at $6.30 - $ 2.21 = $4.09 (less time premium). In my example, current B series cost $1.73/warrant and would realize a gain of about $2.36 or about 135%.
Say share price goes to $10.00. The A series warrant price would be $10.00 - 5.50 = $4.50/2 = $$2.25 because you need 2 warrants to purchase 1 share (less time premium).
The B series warrant price would be $10.00 - 2.21 = $7.79 (less time premium). 1 warrant = 1 share.
Please help me if my logic and/or arithmetic is incorrect.
What can be said here is either RBC really screwed up or they are very bullish on the ultimate outcome of this gold bullrun!
Appreciate your comments.