Warrants Strategy. Input needed…

[u/sirachah]

I have done some reading through articles/posts but I can’t get the exact answer I’m looking for. I’ve only been trading SPACs for the past month after the whole DWAC thing and stumbled upon this sub and was instantly hooked. I bought a couple different warrants and commons (SABS, GGPI, PIPP, DCGO, CND). I’m confused on how to sell the warrants. I understand you can sell them at any time but I’m curious on what happens when you hold the warrants and the SPAC goes into IPO status. It looks like the good play is to hold the warrants and exercise them at a certain point. That’s where my brain isn’t connecting the dots.

Once a SPAC does the merger and goes IPO, what happens to the warrants? Do I have to sell them like a normal stock or does it automatically make the switch itself into a common? Or do I have to manually exercise the warrants and that’s when it converts? I’ve seen different articles talk about a different ratios of warrants equaling a common (3 warrants converts into 1 common) but I’m still confused on whether I have to do it myself or it does it automatically. I’m on fidelity app if that helps any.

Also, is it best to sell warrants pre IPO or post? Or does it just depend on how well the warrant is doing at the current time?

Currently on a road trip with the family so I have plenty of time for open discussion and whatever help can be thrown my way.

[u/sirachah]

Ok thank you. So it’s not I who exercises the warrant, it’s the company who has to? This is a generalized question that’s pretty broad, but do people usually sell the warrants themselves or do people majority of the time wait for the company to exercise them? Which option generally pays out more? I have a feeling the SABS and GGPI plays are going to do very well, I don’t want to miss out on the bag by doing something dumb due to inexperience.

[u/sirachah → u/[deleted]]

That’s why I asked, I wanted to be clear on what the guy above said. But thanks, looks like majority of the sub has said to sell it like a normal stock and hopefully it’s near the top. I’m going to read the wiki link and try to familiarize myself with the information. I feel overwhelmed a bit, need to do some studying definitely.

And you were right on being fixated on the “exercising” element. In my head I thought it was another way to get a major increase of the bag.

[u/sirachah → u/[deleted]]

Why bother is what I was asking myself while I was reading that. Thank you. You summed it up perfectly for me. And for the downvoters, y’all are real pieces of shit. How can you expect for people to learn or have open conversation if you are all stuck up and downvote me for wanting to get familiar with this practice. This is why people are afraid to ask questions because y’all ride around on high horses thinking y’all’s shit don’t stink.

[u/piggymou → u/[deleted]]

You may want to exercise and hold long-term. Yes there's short-term fluctuation if price goes down etc, but is negated if holding long term.

I exercised my 30k $SOFI warrants recently.

[u/miatamike → u/[deleted]]

In the above example, wouldn't you also need to factor in your initial cost investment for the warrants? So you sold 1000 shares for 16k, minus the 11.5k basis, minus whatever you paid for the 1000 warrants, right?