"Yea, but what about, say 2 years from now, when the stock is $5 or more? "
You guarantee that?
But let's take your example. If the warrants were selling for a dollar (they actually are 43 cents Canadian right now, which is a pretty good gamble), as I said, you would spend $2.65 to buy the stock when you exercised the warrant. If the stock was at $5, your profit would be $2.35.
If you buy the stock at its current price, $2.04, and sell it for $5, your profit would be $2.96.
But with the actual price of the warrant, things do look better: If you bought the warrant for 43 cents, and eventually spent $1.65 to exercise it, you would pay $2.09 for the stock. That's almost as good as actually buying the stock.
Your example would be better if you guaranteed that the stock would go to $6.00.
I may actually buy some of these 43-cent warrants to add to the others I own for which I overpaid until I realized my own mistake. |
