There are 25 warrants with various expiration dates (duration) trading but all but 2 expire in less than 24 months so they are not listed in this article as such warrants could well expire before their respective exercise prices are met. Below is an update on how those 2 warrants performed compared to their underlying stock in the month of October.
By Lorimer Wilson, editor of munKNEE.com
What are Warrants?
A warrant is a security giving the holder the right, but not the obligation, to acquire the underlying security at a predetermined (i.e. exercise) price and for a specified period of time (i.e. term or duration).
Why Bother Investing in Warrants
Warrants are priced 70% to 75% less, on average, than their associated stocks and, therefore, you are in an ideal position to leverage your dollars very effectively, i.e. it gives you the opportunity to earn more dollars (in percentage terms) with considerably fewer dollars at risk.
1. SUGARBUD CRAFT GROWERS CORP. (TSXV:SUGR.WT) – an Alberta based publicly traded cannabis company focused on growing hand-crafted, select-batch, ultra-premium bud. For more insights visit their website.
Warrant Details (All prices are as of November 8th and are quoted in Canadian dollars – go here for currency conversion into USD)
- Expiration Date: Sept. 9, 2023 (46 months duration)
- Exercise Price: $0.10
- Current Warrant Price: $0.03 (declined $0.01 in October)
- Current Stock Price: $0.07 (declined $0.01 in October)
- Stock Price Increase Required To Reach Exercise Price: 42.8%
- Profit Realized If Warrant Bought At $0.03 and Exercised At $0.10: 233%.That represents leverage of 5.5x.
The above chart shows that the price of the SUGR stock is within striking range of the $0.10 exercise price having only dropped below that price within the last 2 months.
2. FLOWER ONE HOLDINGS INC. (CSE:FONE.WT; OTCQX:FLOOF) is the largest cannabis cultivator, producer, and full-service brand fulfillment partner in the state of Nevada producing a wide range of products ranging from wholesale flower, full-spectrum oils, and distillates to finished consumer packaged goods including flower, pre-rolls, concentrates, edibles, beverages, and topicals for the top-performing brands in cannabis. For more insights visit their website.
- Expiration Date: March 28, 2022 (28 months duration)
- Exercise Price: $2.60
- Current Warrant Price: $0.29 (declined $0.02 in October)
- Current Stock Price: $1.17 (declined $0.02 in October)
- Stock Price Increase Required To Reach Exercise Price: 122.2%
- Profit Realized If Warrant Bought At $0.29 and Exercised At $2.60: 796.5%. That represents leverage of 6.5x.
The above chart shows that the price of the FONE stock is within striking range of the $2.60 exercise price having only dropped below that price within the last 3 months. That being said, can the price of FONE increase by 122.2% within the next 5 months?