Cenovus Energy Inc T.CVE

CVE Warrant

[FairMount]

The warrant is trading at 4.2 now. What happens if I subscribe for the common share at an exercise price of 6.54? Does that mean I have to pay 6.54$ to buy each common share? Or I pay the difference of 6.54 minus the warrant price?  Any clarification - much appreciated!

[Husky4000]

The warrant gives you the right to buy CVE at 6.54.   Example: You got 1000 warrants trading at 4.20 worth 4200$ You decide to buy exercice them.  So you put 6540$ of your money.  In exchange you got 1000 CVE valued at 8100$.   If you were to sell, you would have a profit of 8100-6540=1560$. So, which one is better?  4200 in warrants or 1560 in sharevalue

[RagingBull3]

You could Sell your warrents for $4200 and buy CVE shares on the open market with the money.   Only difference will be the extra trading fee I think.   BUT  you hold the warrents for the LEVERAGE it offers.    Given the volatility of the common share price, I'm guessing holding the warrents (not selling yet) would be a better bet, just guessing.  But

[Maxmoe]

The math doesn't work. Who would pay 4.20 for a warrant plus 6.54 to exercise it? That's a total cost of 10.74 per share, for a share that trades at $8.10? Makes no sense at all.

[RagingBull3]

Maxmoe, You take a "hit" on the warrents now on a bet that as in my example the commons will be higher than $13.58.    You will breakeven at $10.74, and above $13.58 the gains on the warrents will outpace the commons almost 2 to 1. It depends on how you want to bet, short term, or long term?  and how soon and how high the commons will go.    I'm thinking, if

[FairMount]

Thank you all for replying and nice information. Does that mean if the warrant is not exercised - left expired - it has no value? I think when HSE was converted to CVE the warrant came with a value?

[Husky4000]

Well, if you let it expire without either sellling it or converting it, you lose everything. The warrant did not come with a value.... The market prices it. The market thinks that the right to buy a CVE share at 6.54 within 59 months is worth 4.20 actually.