Alright people I did your homework for you. It took sifting through several articles and reddit pages to get this info into a short brief twitter thread. I better get some patrons out of this LOL.

Financial Education Series: Warrants (thread)

Right now there is a lot of hoopla about warrants, particularly $FMCIW and $OPESW. I will try to give the most simple explanation possible. A stock warrant is simply to right to buy a stock at a certain price. Unlike a stock option which is a contract between two investors...

a stock warrant is between the investor and the company. You can trade (buy or sell) warrants or you can exercise the warrant which effectively allows you to buy the shares of the company at a specific price on a specific date...

Stock warrants can last much longer than call options (some last up to 15 years).

Now it here's when it gets tricky. Why buy warrants vs. buying the stock?

Like options, warrants are basically a leveraged bet. You can buy more for less to gain more. But also you can lose more.

For example (source Investopedia):

"Let's look at another example to illustrate these points. Say that XYZ shares gain $0.30 from $1.50 and close at $1.80, generating a 20% gain. At the same time, the warrant gains $0.30, rising 60% from 0.50 to $0.80. In this example...

the gearing factor is calculated by dividing the original share price by the original warrant price: $1.50 / $0.50 = 3, denoting the general amount of financial leverage the warrant offers. The higher the number, the larger the potential for capital gains or losses"

Now let's look at $FMCI, the strike price is $11.50 (price you can exercise into shares).

You can exercise after the merger or trade (buy/sell) before. There is a 5 year expiration, there is no theta (time decay), downside is the warrants expire WORTHLESS if the merger fails...

In conclusion, the warrants provide the owner the right (but not the obligation like an option) to purchase one share of the underlying company at a specific price (typically the strike price is 11.50) per warrant owned. Warrants are far cheaper than the stock price which allows

the gains to be much higher. ALSO, warrants can have some intrinsic value at purchase. The warrant price + the exercise price frequently is less than the share price, which would result in ARBITRAGE (difference in value)...

except for the fact that there is usually a "waiting period" before warrants can be exercised. $FMCI merger is being extended to anytime up to September...

Shares = safe if merger fails (don't lose all you money but will have a nice drop)

Warrants = lose all money if merger doesn't pass, but possible 10 bagger

Stay safe, Stay Smart, Stay Winning

REBEL

After reading this you can look at my other saved Financial Education Tweets on my Patron

Below is the link to what a SPAC is!

If you like these educational series being a patron would be greatly appreciated! Thanks

Financial Education Series: SPAC https://www.patreon.com/posts/financial-series-38314041?utm_medium=social&utm_source=twitter&utm_campaign=postshare

If I said something wrong about warrants please kindly inform me in the comment section so I can change it on my Patreon post... also if you have any more information (like if $FMCIW or $OPESW is a better warrant vs. stock buy right now that would be appreciated)

Let's get some RTs in this piece, I am learning so much from doing these Finance Education Series tweets and want incentives to do more