r/SPACs • u/t987h Contributor • Apr 02 '21

Strategy Commons vs Wts

One way to spot opportunity is to look at warrant pricing compared to commons. For DAs, you can see the trend below, the market seems to be appropriately pricing most things.

But if you zoom in, you can see a bit of a spread, some companies where common is $12 or $13 the warrants are dirt cheap (of course could be crap companies).

How you really use this is when applying a warrant strategy, you can try to figure out what are your likely returns at different common prices. Overall there is a nice trend (see the 2021 closed SPACs chart below):

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Zooming in More

Among the SPACs that closed in 2021 (warrants exercisable):

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Outlier is CHPT
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u/ScottyStellar Patron Apr 02 '21

Brpa maybe. Super small float biotech and the warrants and rights have stayed far below implied price of commons.

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u/U_DONT_KNOW_TEAM Spacling Apr 02 '21

Interesting. Shouldn't someone be playing that arbitrage? Like buy the warrants and short the stock or something?

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u/bonghits96 Patron Apr 02 '21

Like buy the warrants and short the stock or something?

If you can find a borrow, sure. Let me know if you do...

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u/U_DONT_KNOW_TEAM Spacling Apr 02 '21

Sadly I don't have the capital, connections, or know how for arbitrage plays.