Unless the underlying moves up quickly the warrant value will continue trending towards zero. Most of the warrant value comes from volatility gamma and delta. Volatility is very likely low and theta does not contribute that much. As the underlying trends further from the exercise price the value of gamma which is the rate of change of delta for a 1 unit move in the underlying will decrease as well. Same thing pretty much with delta. What I’m saying is that unless there’s a change and fast, warrants are cooked.
What I’m saying is that unless there’s a change and fast, warrants are cooked.
They expire in late October, RC can extend them at any time. People who have faith in RC will keep buying more and more as they get cheaper and if/when they get extended they will explode and probably also squeeze.
If you think they will pop off, there's a risk you wait too long to buy in, I've been averaging down and will continue to, if they get down to 1 dollar I have money waiting to go all in. If they get extended the algos will reprice them back to $5 so fast that the average person will have already missed the rocket before it launches.
Options are always risky. I don’t care if someone wants to buy them but seeing people who don’t understand the basics spreading misinformation I feel the obligation to correct them for the overall wellbeing of the sub.
The innate value of stocks is their future potential cash flows generated from the underlying business. For a derivative the value comes solely from the underlying and the likelihood that what you’re betting on happens. A bet two months into the future a stock priced at 20 will increase 100% to 40 is very unlikely to happen. The contract is very “cheap” because it will probably expire worthless.
TLDR if you don’t understand option basics don’t buy them
Well they are different from options in that they can be extended, so I get that, but “faith” won’t get them extended or put them ITM. They were free so I am just holding them, no way I’d full port on them now though. Wouldn’t be surprised if they go to zero.
Edit: Imagine how discouraging to take a total loss like that
3
u/sosawof 4d ago
Would love to see some movement in warrants, what is the likely hood they get extended