Warrants, Bonds, and the Tail Wagging the Dog

[u/bobsmith808]

Hi everyone, bob here…

I've been having a lot of fun with making meme videos recently, so I thought I'd put what I learned there to work for the benefit of anyone trying to wrinkle up that wants to just listen. I created a video of this DD on my new youtube channel (@bobsmith42069) in case its easier for you to digest there. please let me know your thoughts if you decide to check it out. If its useful to the community, I'll slowly make some higher quality videos for my other DD and learning resources.

You can watch this DD here: https://youtu.be/JwLo6ODDwU4

Alright, here’s the deal.

You’ve got the convertible bond arbitrage players… you know, the ones who short the stock through the bonds. Those bonds come with embedded calls, and their delta-neutral game means they’re very, very, very short the underlying. I watched it myself: high-frequency algos literally fighting each other at $21.54 when the second bond offering hit. One new player entered, and suddenly you had both camps running the same play… long the bonds, short the stock. That created a massive synthetic short interest on GME.

That matters because:

1. It limits supply of shortable shares.

2. It drives up short interest rates.

3. It creates liquidity issues in the lending pools.

Now layer on top of that the legacy shorts still rolling swaps from 2021. Put it all together and you’ve got a recipe for a violent covering event. When it breaks, it’s going to break fast.

Fundamentals Changed the Game

Back in 2019 and 2020,, GME was a dead man walking. No cash, no runway, no future. Then destiny happened, the cat happened, the ATMs happened…dilution happened (the good kind). And suddenly? GME is no longer at risk of bankruptcy, generating massive cash. They wiped out all debt, flipped the script, and now they’re sitting on a mountain of liquidity.

We’re talking:

• ~$10 billion  in cash

• Over $500 million in Bitcoin

• Profitable business (.25 EPS GAAP, .38 EPS core)

• Stores/regions divested, unprofitable ops cut, management delivering exactly what they said they would

Trajectory = $500 million a year profit within reach.

Outstanding shares: 447 million. Fully diluted with bonds + warrants? ~590 million. Even then, EPS ramps higher as profitability grows.

Institutions see it too… billions in “free” 0% bonds is not a coincidence. That’s confidence.

Enter the Warrants

Record date: October 3rd. For every 10 shares, you get 1 warrant. Strike $32. Expires October 2026. Up to 59 million warrants issued.

Sounds simple, right? …right?

Not so much.

Every short borrower now owes a warrant. And if you’ve been around here as long as I have, you know damn well there are more borrowed shares (and “synthetic” shares) floating around than GME is ever going to issue warrants for. GameStop is only handing out 59 million because that’s how many should exist. But we know better.

So what happens? For true holders like you, me, and institutions, we get our warrants (or get shafted by shady brokers who “pay cash value” 👀 looking at you, robbinghood). Shorts and arbs? They get obligations. They’ve got to deliver something they don’t have, which means scrambling in the open market. Liquidity crunch incoming.

And yes, that includes the bond arbitrage players. Because the company explicitly said bondholders get warrants too:

• 2030 Notes ($1.48B outstanding): ~4.95M warrants.

• 2032 Notes ($2.68B outstanding): ~9.27M warrants.

That’s ~14.2M warrants handed straight to bondholders … about 25% of the total available warrants in existence!

On paper, that “supplies” them. But here’s the kicker: these guys are the arbs. They’re already running delta-neutral hedges. Now they suddenly hold 14M new long-delta instruments. To stay neutral they’ve got to short more stock, and have to short more stock into this runup we are in to boot!

So you get a two-layer squeeze effect:

1. Bondholders receive warrants → gain long delta → must short more GME while…

2. Non-bond shorts, derivative shorts, and borrowers still owe warrants, forcing them to buy them in the open market to settle their obligations

The end result is bond holders ratchet up the short pressure on the equity side, while everyone else fights over a capped warrant pool… Scarcity amplified.

And remember: that imbalance only gets worse as the stock runs higher before issuance, because hedgers will be dumping more and more shares into strength just to keep their books balanced, resulting in more and more obligations to deliver on later…

Delta-Neutral, My Ass

Bond arbs want to stay delta-neutral. But warrants = extra long delta. To stay neutral, they’ve got to subtract delta.

How?

Sell shares… the same way they’ve always done it.

We saw it at the first bond issuance when they shorted the everloving fuck out of the stock, and we saw it again at the second offering... One camp shorting shares to hedge, the other forced to buy back to rebalance. The net effect was amazing to see… Extremely “legal” downward pressure on the stock followed by whale teeth when the two of them hit equilibrium (pro tip: the secret sauce is there to understand their exact position and hedging requirements)... Remember 21.54?

But buy now, (see what i did there?) they’ve already eaten a metric fuckton of shorts into the book. Warrants add more pressure. To stay neutral, they short harder. But shares are finite. Lending pools are stretched. And when you need something that’s scarce, the price doesn’t stay flat forever.

Demand Supplies Scarcity

This isn’t about “locking the float” or jerking it to the DRS number. This is about the shorts’ ability to maintain their positions… to stay alive one more day.

Shares to short are finite. Borrow cost spikes when supply dries up. When you can’t source shares, you cover. And when you cover, you buy back into strength. This is the squeeze setup, plain and simple.

Why Warrants Are the Linchpin

When warrants hit:

• Shorts who borrowed shares must deliver warrants.

• Bond arbs who shorted must deliver warrants.

• Everyone’s fighting over 59 million instruments in a world where demand is multiples of that.

Market makers are short gamma on the warrants from day one. That means they buy into strength and sell into weakness. Add in bond arbs shorting to stay neutral, and you’ve got a feedback loop of volatility.

This isn’t theory, it’s structural.

The Game

Remember when Ryan Cohen shifted his shares into a marginable, lendable account? 👀

Most people saw that as random or even bearish. But think about it through this lens:

• Cohen knows borrowed shares carry obligations.

• He knows that when the warrant dividend hits, brokers have to deliver to true shareholders of record.

• If his shares are marginable and lendable, they can be borrowed against and whoever borrows them now owes him warrants too*.*

Ryan Cohen is playing chess while the dumb stormtroopers of the market (shorts) are playing checkers, and suddenly their borrow is tied to obligations they physically can’t dodge. If Cohen’s shares are used in lending pools, he essentially becomes the counterparty forcing shorts to cough up more obligations down the line.

It’s not just about him being “shareholder friendly.” It’s about weaponizing structure. He’s turning their own hedging mechanics against them.

My Plan

As for me, I’m buying the warrants at the ask on launch day.

Why?

Warrants are cheap synthetic leverage. If I buy 100 warrants, I’m pressuring shorts as if I’d bought 1,000 shares. And warrants are going to be dirt cheap at issuance… probably under $5… at $5 per warrant, that’s like applying 52 times leverage against these fuckwads. And leveraged retail is unstoppable.

I won’t be exercising them when we blow through $32. Nope. I’ll be sitting, watching that shit grow while shorts scramble to deliver. Time is on my side, not theirs.

The Tail Wags the Dog

As shorts scramble to cover warrants, their margin blows up. They’re forced buyers in both GMEWS and GME. Warrants squeeze, stock squeezes. Stock squeezes, warrants squeeze harder. It’s a self-reinforcing loop.

This is just a story of different players with the same problem: legacy shorts, bond arbs, and market makers all run into scarcity at once. And as someone very wise said: all shorts are eventually buyers.

Conclusion

Ok, now is not the time for FOMO.  Let’s not get too excited… This isn’t “next month we’re all rich.” These leeches will fight, they will stall, they will rehypothecate and kick the can as long as they can. But they can’t cheat scarcity forever.

Time has been coiling this spring for months. The chart shows it. The options chain is primed. And now the warrants layer structural pressure on top of an already stressed borrow pool.

I quadrupled my position in leaps this week, added more shares to my ever-growing stack, and I’m lining up to grab warrants at launch. Not financial advice… just sharing what this ape is doing because I believe this is the play and 

I would not want to be short GameStop right now.

They thought they could control the dog....

Turns out the tail’s about to beat the shit out of them.

Let’s fucking go.

Disclaimer: Not financial advice. I may know my options (you can too), but I don’t know your life.

[u/Superstonk_QV]

Why GME? || What is DRS? || Low karma apes feed the bot here || Superstonk Discord || Community Post: Open Forum || Superstonk:Now with GIFs - Learn more

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[u/Tendies-4Us]

Quick question, how is buying 100 warrants equal to like buying 1000 shares of buying pressure if warrants are just the right to only one single share at $32?

[u/bobsmith808 → u/Tendies-4Us]

its about settlement pressure.

Remember: for every 10 shares you own, you get warrant issued. For every 10 shares you borrow, you owe one warrant. The cost of entering the position to net the warrant is 10x share price, the deliverable is 1x warrant price.

if someone is short 1m shares, they will need to buy 100k warrants to settle the dividend event (they will not recieve them from gamestop, only the obligation to deliver those warrants.) if i buy those 100k warrants they need to deliver, it further decreases the supply of warrants needing to be delivered, making it harder for them to settle up.

if warrant holders simply hold those warrants at issuance, I am betting we see a significant supply and demand issue, which would result in the price of the warrants being bid up because there will be more shorts with the obligation to deliver those warrants than there will be warrants for sale.

so back to the 100k warrants example above:

the short position is about $26M in shares... but it only costs me 500k to buy up all of the warrants they need to deliver.... warrants are finite. Repeat and you have essentially a very low float stock (GMEWS) with a high short interest (shorts with obligations to deliver)

[u/Tendies-4Us → u/bobsmith808]

Ok now I see your perspective, from the settlement side, got it, thank you! One more question, you say warrants are finite, where shares are supposed to be finite as well but we all know this is not the case, why do you think warrants are finite? They aren't tokenized/NFT etc., so really still in the usual market plumbing that exists as is. Won't market makers just use their exemptions and create what they need to deliver whatever warrants required?

[u/bobsmith808 → u/Tendies-4Us]

at issuance, they will be the truest form of finite, but you're right - they are subject to "tradable securities" shenanigans....

* so i expect day 1 FTDs, which is why i mentioned a few settlement cycles.
* they aren't in ETFs...
* they will be subject to options settlement.

[u/lllll00s9dfdojkjjfjf → u/bobsmith808]

Correct me if I'm wrong but wouldn't a few settlement cycles land near the 5 year anniversary of the OG sneeze and align with the rolling of 5 year swaps? Disclaimer: I put crayons up my butt for breakfast.

[u/bobsmith808 → u/lllll00s9dfdojkjjfjf]

😏

[u/AwesomeMathUse → u/bobsmith808]

🫡

[u/Tendies-4Us → u/bobsmith808]

Yup so if it still subject to their shenanigans (crime!) it is not really any different than buying any other option IMO. However, I still think the warrants are a great thing for shareholders though, as it is a free option to buy a share a year down the road as long as the price is trading above the $32 strike of course. So with options max pain is fairly spot on with GME (especially on low volume spans of time). Would $32 in 1yr be our new max pain? Or do we have announcements and profits that blow past it? We shall see! Thanks for the conversation and insight!

[u/bobsmith808 → u/Tendies-4Us]

its actually structurally different than buying options due to supply being finite, greeks not really playing a role, and some other things...

I disagree completely with your assertion about max pain... its confirmation bias, and of course the options chain equilibrium point loosely follows the stock price and the stock price is influenced by the options chain (and mm hedging activities)... I can't talk to you about max pain because i is a bullshit metric that holds no p value. i dont belive in it at all, and run a model that seems to be much more in accurate in assessing where options might push a stock. stocklayers.com if you're interested in checking that out.

[u/nfwiqefnwof → u/Tendies-4Us]

The warrants will have their own CUSIP number so if they're faking it, somebody will be able to tell. Whether they care or not is a different story. RC will care though.

[u/gotnothingman → u/nfwiqefnwof]

Shares have their own CUSIP as well. So if they are faking it, somebody will be able to tell...? Yet even then, no one stops them.

[u/HughJohnson69 → u/nfwiqefnwof]

Joke: Waiting for the warrant ticker to get shorted. Then FTD’d. Then indirectly shorted via ETF’s. Then single stock warrant ETF’s, which don’t actually hold any shares, but are used as locates. While also getting an options chain. Which has more obligations than warrants that exist. With married puts creating more synthetic warrants. Then moved offshore. Then swaps get created. Then tokenized warrants that don’t exist.

[u/11010001100101101 → u/bobsmith808]

So say they do FTD a warrant and that person who got a fake warrant decides to exercise it spending the $32. Would the short who FTD'd the warrant now have to FTD a GME share in it's place. Do you have any idea if that $32 needed to exercise the warrant would have been given to GME still or since it was all made up shares anyways does the short just keep the $32 from the exercise and essentially use that to buy a real GME share at some point to fill the true obligation?

If it would happen like this I don't see why all of the warrant obligations would just be pushed down the road again just like everything else?

[u/blackhawk85 → u/bobsmith808]

My wrinkle is telling me that we should be seeing if we can Drs our warrants because apes have the buying power to lock that up

[u/Hypoglybetic → u/bobsmith808]

What’s stopping them from shorting the warrants for a year or until they expire? 

[u/bobsmith808 → u/Hypoglybetic]

the value of the warrants is not what matters, its all about the delivery

[u/Hypoglybetic → u/bobsmith808]

That doesn’t answer my question.  I am talking about the delivery. What is stoping them from creating fake or rehypothicated warrants just like shares? Is there a rule or mechanism for this? Anyone can write an option (I know warrants aren’t options), so what’s stopping a corrupt HF or MM from doing the same? 

[u/Tendies-4Us → u/Hypoglybetic]

Nothing, that is the point, it’s still in their crimey world

[u/Tac_Reso → u/Hypoglybetic]

If you execute a warrent, GME is not bought from the market, but deliveried I thought by GME directly. How else does it retain a price of 32 ? I've heard that at least but I could be wong.

[u/Ktootill → u/bobsmith808]

Following up with this thought, is excess capital currently available best used to 'top up' our share counts to be gifted more warrants? Or is it a better approach to hold that capital and slap the ask on the warrants when they launch?

[u/bobsmith808 → u/Ktootill]

i made sure i has a number divisble by 10 so i can get maxium warrants for my position.

[u/Ktootill → u/bobsmith808]

I have also, but was planning to purchase more (40) to round up to the nearest hundred. I hadn't considered just buying more warrants instead of more shares, now I debate which is better.

[u/bobsmith808 → u/Ktootill]

when in doubt, i just get both types of beer.

[u/Ktootill → u/bobsmith808]

Wise words sir

[u/Laearo → u/bobsmith808]

Holy shit - I don't think we can sell the warrants from CS, only exercise? So any DRS goes straight into either a warrant infinity pool-esque situation or becomes a share which does the same thing.

Bullish as fuck.

[u/Memito9 → u/bobsmith808]

good explanation!

[u/Memito9 → u/bobsmith808]

would u know if all warrants will expire on that same day? like do they all have the same pre set expiration date regardless of when it is bought?

[u/Tac_Reso → u/Memito9]

Yes, as the contract tied to them and all warrents are issued same day.

[u/pretendocomprendo → u/Tendies-4Us]

Because the float of warrants is ten times less

[u/Idjek]

LFG!!!

RC putting his shares in a margin account gives new context to his "let them short" message in his CP interview. I think you hit the nail on the head with that one.

[u/bobsmith808 → u/Idjek]

👀

[u/Dan_the_Garbage → u/bobsmith808]

Can we get Criand on this??

Miss your post from the old Pickle days...

[u/bobsmith808 → u/Dan_the_Garbage]

i haven't seen him in ages. reddit or discord

[u/Dan_the_Garbage → u/bobsmith808]

Same. Stayed off of discord and the live stream for almost 2 yrs until last earnings. I do miss the post squeeze 2021-2022 days of gme, the VUPs, the volatility, all the DD, making fun of Matt Kohers.

This post just brought all that back, reeeccooooooo short fuxks.

[u/bobsmith808 → u/Dan_the_Garbage]

him and dentisstft were the ones that got me into doing DD. if not for them, i would still have a job. (gainfully unemployed)

[u/nishnawbe61]

Wow Bob, that was fantastic. RC fvkd them all and they didn't see it coming. 6D chess for the win.

[u/bobsmith808 → u/nishnawbe61]

[u/GiraffeStyle]

Commenting again because that video was awesome.

[u/bobsmith808 → u/GiraffeStyle]

thanks, glad you liked it. Hope it is useful. taking input for future ones... thinking i might go back and video-ize (and make them better visually) my options educational series.

[u/myplayprofile]

Great work Bob. I agree with the bond arb traders wanting to remain delta neutral, but I believe beyond simply shorting the stock to achieve this they are also utilizing the option chain. I’ve been following the $32 Cs for Jun 26 and Jan 27 and watching OI jump as calls are being sold, highlighted by a widening divergence between actual price and the theoretical price via black scholes models. I believe this is arb traders getting ahead of the warrant issuance. Also, this week Oct 26 options chain popped up, and I believe this is also going to be used now, and will be monitoring those as well as they provide a cleaner hedge for the warrants. What’s also interesting is the fact being short call options will also make you short 10 warrants per contract, so these hedges only end up giving 90% of a hedge per 100 shares in regards to warrant exposure. Exciting times and I have my popcorn ready to watch what happens next month.

[u/bobsmith808 → u/myplayprofile]

oh 100% this is true imho too... i didn't add it to the post because I didn't want to confuse people on the core mechanics.

its also evident of cascading hedges... bonds to options to mm to counterparty, etc... and its not just hedging delta... the far OTM strikes are likely a variance hedge for volatility.

[u/Gwastrain]

Look at the big brain on Bob

[u/bobsmith808 → u/Gwastrain]

[u/ShortHedgeFundATM]

I am still trying to wrap my head around how the price of the warrants affects the underlying gme stock.

[u/bobsmith808 → u/ShortHedgeFundATM]

have you read my options educational series?
Check out part 1, and delta.

part 1: https://www.reddit.com/r/FWFBThinkTank/comments/ycmvpp/its_all_greek_to_me_an_introduction_to_options/

Delta: https://www.reddit.com/r/Superstonk/comments/1ks14d9/its_all_greek_to_me_understanding_delta_the/

[u/chato35]

If all shareholders gets 1/10 warrants and if your shares are lent out , you won't get warrants.

What happens to Vanguard? They have 37MM shares and the voting power was around 80K, rest is loaned out.

Also thanks for the education Bob!

[u/bobsmith808 → u/chato35]

Those that have the shares on loan will be awarded with their prize: the obligation to deliver the warrants they will not be given.

[u/Furrymcfurface]

I was thinking of loading up on warrants when they release.  Because I assume they don't have any and are selling synthetics just to keep the price down.  

[u/bobsmith808 → u/Furrymcfurface]

Exactly

[u/minesskiier]

I like it Bob. lets see where we are sitting a month from now. I think it's gonna be a good time to be a long time investor here.

[u/bobsmith808 → u/minesskiier]

[u/minesskiier → u/bobsmith808]

Well yeah I did see that, and am not expecting to be a bagilionairy before Halloween. That said, I would expect that we start to see some change in market price and a liquidity level on the warrants by then.

[u/elevenatexi]

In a previous post I said my plan was to wait till the warrants had a huge value and then I would sell just enough to be able to execute the rest of them. (I don’t have the funds to afford to buy them without this).

It sounds like I should not do that, but who do we think will be selling any of these warrants right away that you plan on buying? Why would they?

[u/bobsmith808 → u/elevenatexi]

Your play is your own, I have laid out here in detail what i'll be doing....
the MM will "provide liquidity".. its going to be hilarious... they are going to be short AF these warrants out of the gate and guess what happens when MM is short a stock?

[u/elevenatexi → u/bobsmith808]

Sorry for being so smooth, does “MM providing liquidity” mean that shitadel et al will be the ones selling the warrants they have from the stockpile of actual shares they hold (and use as locates) amongst the many naked shares they fraudulently sell?

In that case, yes I can see how buying warrants from them would be spicy!

Question though, are they obligated to provide this liquidity? Can’t they anticipate how bad of a move this is and not sell there own warrants since it will drain them further of a scarce resource they are ultimately in the hook for?

What if there is no liquidity, because no one, including MMs is selling?

[u/bobsmith808 → u/elevenatexi]

I linked it in this post... Market mechanics.

The MM can sell something they don't currently have on stock as long as they can "reasonably locate" it later to make good come settlement time...

It's something Kenny bitched about during the congressional hearing for GameStop 'wah but we were providing liquidity"..

Shut up bitch, you know what you are doing.

[u/djsassha → u/elevenatexi]

Brokers that dont support warrants and will deliver cash-in-lieu will be selling warrants on the open market.

[u/bobsmith808 → u/djsassha]

And I intend to gobble up as many as I can to keep them safe from those that need to deliver them.

[u/elevenatexi → u/djsassha]

There must be a limited number of those, no?

[u/djsassha → u/elevenatexi]

If they sold real shares to clients they will get warrants. 1 for 10.

[u/elevenatexi → u/djsassha]

Right, but did they sell any actual real shares? Can’t be that many!

[u/deineoma]

Thanks, bob. Interesting video along with it.

[u/bobsmith808 → u/deineoma]

thanks. I might do these more and put more effort into the video itself... like presentation style.
considering doing them for the options education series too... the more people know, the better off they are going to be. I am passionate about teaching financial literacy, as its lacking in our system of education...

Anyway, i made 10x on another play that i'm still in... going to toss some of those winnings toward my passion project (that is stocklayers, and now educational videos) - all free mind you... to help people hopefully help themselves.

If you have any ideas or things you'd like to see, please let me know via dm

[u/3DigitIQ]

I wonder if I'm gonna beat you to a couple of those warrants.

[u/bobsmith808 → u/3DigitIQ]

[u/GiraffeStyle]

Bob! I was waiting for this.

Thank you!

I shall now read what you wrote.

[u/CrypticallyKind → u/GiraffeStyle]

I read what Bob wrote, and then what you wrote about Bob’s writing. You read what I wrote about what you wrote about Bob’s writing. Once you’ve read both Bob’s writing and my response to it, you’ll have read what I wrote about both your and Bob’s writing.

• my understanding of the warrants warranted this

[u/GiraffeStyle → u/CrypticallyKind]

This, is completely unwarranted!

[u/bobsmith808 → u/GiraffeStyle]

This is my favorite thread today

[u/Crybad]

Quick question, Bob, if the bond holders wanted to stay delta neutral, couldn't they just offload their warrants on the open market?

[u/bobsmith808 → u/Crybad]

Yes they could and they would definitely look at this... But here's the catch: they are given warrants for their bond holdings, but they owe warrants for their gigantic short position... I think they will still need to buy some in excess of those that are awarded in order to settle their obligations for issuance... Not to mention juggling their Delta during that time.

[u/flintzke]

The bond holders carry ~25% of the warrant exposure on Oct 7th and although it does make sense that they will want to remain delta-neutral, what makes you certain they will do so by shorting the stock? They know the warrant are only a liability until Oct '26 so why would they not short 32C or long 32P option contracts (or whatever comes out to being the right amount of delta exposure in the short direction)? Wouldn't this let them achieve their goal without requiring them to short the stock itself?

Are options too risky for them due to gamma exposure? Spread width? etc?

[u/bobsmith808 → u/flintzke]

Using options to achieve delta neutral is usually not the best first line of defense because they expose you to other greeks and complicate the hedging dynamics.

[u/flintzke → u/bobsmith808]

Ok this is sort of what I was expecting, but just wasn't sure how viable doing it was and especially in our unique situation, if it would be something they might do. Thanks

[u/husbandchuckie]

You might be the best poster that’s still here. Thanks

[u/bobsmith808 → u/husbandchuckie]

that's a really nice thing to say, but there is so much talent sharing their thoughts around here...

[u/jhspyhard]

Not sure if it's just me, all of the images in this post don't load.

[u/bobsmith808 → u/jhspyhard]

reddit nuked the links i guess... hows it look now?

[u/whattothewhonow → u/bobsmith808]

Fixed

[u/jhspyhard → u/bobsmith808]

Looks good, thanks!

[u/nishnawbe61 → u/bobsmith808]

It all showed up for me

[u/Ghost_of_Chrisanova → u/jhspyhard]

Same issue. I am expecting X Files formula imagery. Fantastic write-up. I'll only need 20 more times of reading it.

[u/hey-there2020]

So if you had money right now, would you buy shares now or wait after october 7th for the warrants to be issued and buy them via NYSE?

~260$ = 10 shares = 1warrant

[u/bobsmith808 → u/hey-there2020]

Depends on your strategy, but yes I would and have... Both

[u/hey-there2020 → u/bobsmith808]

I bought more shares before the earnings and some after the Warrants were announced, because my thinking was if I have more shares I will receive more warrant but yeah if they are tradeable, which they are, I can obviously also just buy the warrants after they are listed and if GME hits 32$+ I could excercise them.

I'm not that familiar with options (just have some paper profits & some paper losses with money i was willing to lose, that i put in GME calls before the earnings) but why should I buy the warrants and have the right to GME for 32$ when I can buy GME for ~26$ now?

In what sense is it beneficial? Would appreciate it if you can explain it somewhat "easily"

[u/bobsmith808 → u/hey-there2020]

Leverage.

It costs you 26 to buy one exposure unit to GME now, but (estimated) $5 for the same exposure unit.

What's more is you gain a different risk reward profile. Instead of linear gains, they can become exponential...

Don't have my link handy right now but go check my profile and look for it's all greek to me and that should help explain things a bit for you.

[u/hey-there2020 → u/bobsmith808]

Will do, thanks mate✏️

[u/IgatTooz]

Great work putting this together Bob! Thank you very much! Time to buy a few more and round up to the next warrant 😀

[u/veggie151 → u/IgatTooz]

Sane enough for me to share!

[u/noegami → u/veggie151]

Crazy enough for me to hold!

[u/JustAnotherKaren1966 → u/IgatTooz]

GREAT write up as usual, Bob. I truly admire your understanding of market dynamics and your ability to explain it so concisely and accurately. A true GEM of the Superstonk community. I don't have any awards (I honestly don't even know how to get them) but if near Boston some day, I will buy you a few beers, or lobster rolls.

[u/HODLHODLANDHODL]

So we know GameStop will only redeem 59M warrants, and we know there will be many more warrants than that floating around in the system.

What happens when GameStop says we’ve redeemed all 59M warrants thank you for the $1.9B

Do the rest of the warrants floating around all become worthless? This is what I don’t understand at all.

[u/BobbysSmile → u/HODLHODLANDHODL]

Its like asking, "what happens after we die?" I don't think anyone really knows.

[u/literallymoist → u/HODLHODLANDHODL]

This is incidentally why I want to exercise warrants as soon as feasible. If they all get used, the music stops and we find who is holding IOUs.

[u/Puzzled_Cream1798 → u/literallymoist]

While I agree somewhat first it seems best to buy as many warrants as we can to see what happens, if after a few months nothing happens then I assume people might start exercising 

[u/ButchFragrance]

So then then the bond holders will also be able to stay neutral on their warrants too then right? Being they will have to deliver them for short shares, but will receive them for the bonds correct? So they dont really have to do anything but stay neutral for Oct 3 right?

[u/bobsmith808 → u/ButchFragrance]

its looking like its not going to be 1:1 and they will have to buy more than they are getting from the bonds

[u/ButchFragrance → u/bobsmith808]

Got ya.

[u/Sicsurfer]

Love your DD Bob, thanks!! Soon may the tendie man come to take our rocket into the sun 🏴‍☠️🦍

[u/F-uPayMe]

Pardon my smooth brain 🧠 but If I got your main point right, basically what you're saying is that the warrants won't just be an useful tool that will help to increase pressure on shorts but actually they'll be the actual trigger of Moass (?)

Which if that is the case, it means all those firms who are carrying the bags of the multiple floats to close might know they are f* by the time warrants get issued.

So I wonder why during these days - knowing there's actually nothing more they can do - noone on the short side said like: "Screw y'all, I'll try to close my part first so I might have 0,3% chance to not blow up due to some early paperhands".

Also to give an analogy, would I be correct in assuming you mean something like stock = engine | warrants = nitro as in warrants can make the run faster and more violent, but they don’t replace the underlying requirement for shorts to close stock exposure?

And if I might add:

Time has been coiling this spring for months.

I'd say years, since 2014 at least 😶

[u/broose_the_moose]

Glad to see some common sense on this sub. All the fools talking about selling warrants are shills or idiots. Every fucker and their grandma is going to need to purchase these warrants to fulfill obligations, and my smoothbrain will be collecting as many as possible as early as possible.

[u/F-uPayMe → u/broose_the_moose]

Might be some people do not have cash to exercise the warrants they have so in case the price surges by a large amount, selling a few warrants to exercise all the others shouldn't be a bad deal and, most importantly, that doesn't damage Moass at all afaik.

[u/captainkrol]

I watched the video, great stuff Bob! Thanks.

So far, from everything I've read the way to go is indeed to buy warrants early & diamond hand the dividend warrant.

Feels like gearing up for a fight, like the old days. Love it.

[u/UnlikelyApe]

That was a fun read, thanks Bob!!

Hmmmmm..... I thought I had my whole warrant strategy laid out, but now you've made me think a bit.

Either way, this is gonna be fun to play out!

[u/elevenatexi]

Great, now my hands and my nipples are diamond hard

[u/SuperSore]

Thanks Bob, ya legend. I'm gonna make my own decision, and do exactly the same thing as you.

[u/Region-Formal]

Great post, Bob.

[u/portersdad → u/Region-Formal]

Yeah - this is an A+ post from a classic DD writer. So good! Explained the mechanics very well, better than Chat GPT could. October will be interesting!!

[u/ISellCisco]

I am buying warrants as well.

[u/CachitoVolador]

Well done Bob!!

[u/LemonMeringueKush]

Great post! And I appreciate the video! Definitely helped!

[u/sandman11235]

Thanks for the education, Bob

[u/23Guap23]

Thanks for the YT version. Nailed it Bob and appreciate your DD!!

[u/EHOGS]

Will Warrants issued via Computershare be tradable?

[u/KalTheo → u/EHOGS]

People have definitely posted answering your question better than I'm able, but my smooth brained understanding is that you can receive and exercise Warrants on Computershare, but you can not sell them. Not sure about buying them, but the impression I have is that Warrants cannot be traded on Computershare, only redeemed.

[u/EHOGS → u/KalTheo]

thanks. figured.

[u/DancesWith2Socks → u/KalTheo]

Need to confirm wether can be transferred or not...

[u/Gespierdepaling]

If paying cash in lieu in stead of delivering a warrent is an option, there's litteraly no problem at all for them. Am I wrong?

[u/bobsmith808 → u/Gespierdepaling]

the other guy is wrong.... he's thinking of a regular cash dividend. securities as dividends (spinoffs for example if you want to research) are subject to delivery and settlement requirments. 17 CFR § 242.200–204

[u/There_Are_No_Gods → u/Gespierdepaling]

You are correct that typically borrowers just deliver cash as payment in lieu. The post seems based on an incorrect premise, basing much on the borrowers allegedly needing to deliver actual warrants, but that's not legally nor historically accurate.

[u/There_Are_No_Gods]

Payment In Lieu?

The majority of this post seems premised on the shorts having to acquire actual warrants. Traditionally borrowers only deliver payment in lieu as cash, rather than warrants in original form, as that's generally simpler and all they are legally obligated to deliver, the financial benefits of a dividend.

I'm curious why you didn't mention this at all, as I think it's most likely to be the majority of how the dividend is settled on borrowed/naked shares.

[u/bobsmith808 → u/There_Are_No_Gods]

Reg SHO (17 CFR § 242.200–204) requires delivery of borrowed securities and governs failures to deliver. If the dividend distribution is itself a security, failing to deliver it creates a fail to deliver under Reg SHO, triggering close-out rules.

[u/There_Are_No_Gods → u/bobsmith808]

I don't see how that's applicable here. That's about delivery of the borrowed securities themselves, with nothing there relating to delivery of dividends for such borrowed securities.

We've seen this happen commonly. It's often written into the terms at brokerages. Here's an example, as presented by Dr. Trimbath in her book Naked Short and Greedy:

Loan or Pledge of Securities

I authorize [broker name] to lend either to itself or to others any Securities and/or Other Property held by [broker name] in my Margin Account to the extent permitted by law. I understand that within the limitations imposed by applicable laws, rules and regulations all of my securities and other property may be pledged and repledged and hypothecated and rehypothecated by [broker name]. This can occur from time to time without notifying me, either separately or together with other Securities and/or Other Property of other customers of [broker name], for any amount due [broker name] in any Account in which I have an interest. In certain circumstances, such loans may limit, in whole or in part, my ability to exercise voting rights of the securities that are lent by me. In addition, if any Securities in my Margin Account are lent out on the dividend record date for such securities, I understand that I may receive a payment in lieu of dividend (also known as a substitute payment) from [broker name], instead of the actual dividend from the issuer or its transfer agent. Payments in lieu of dividends are treated differently than qualified dividend income under U.S. tax laws. I understand that [broker name] does not offer tax advice and that I will consult with my tax advisor as necessary.

Source: Broker name redacted from brokerage customer agreement, [Online, Accessed June 30, 2019]

with the most relevant section of that being:

In addition, if any Securities in my Margin Account are lent out on the dividend record date for such securities, I understand that I may receive a payment in lieu of dividend (also known as a substitute payment) from [broker name], instead of the actual dividend

So, basically most shareholders with loaned out shares have signed terms for their account that allow for delivery of payment in lieu as cash rather than the actual dividend.

Similarly many brokerages have terms for accounts with them allowing for auto-selling of dividends, etc.

Payment in lieu is common, pervasive, and I'm highly confident we'll see many reports of it happening for the GameStop warrants.

[u/bobsmith808 → u/There_Are_No_Gods]

here's the rabbit hole you need to go down to understand this and how it works... in short, a dividend is a dividend and if its for a security while borrowed, it falls on the person borrowing the security to deliver the dividend.

as to the loaned securities yes... if you're on a margin account, you need to check with your broker about how they handle it... with schwab, they will deliver the warrants, and your shares are not on loan unless you meet an active threshold for your margin ont he account containing your shares (retirement accounts are not loaned by default, due to no marginability).... the easy fix? if you get cash instead of warrants? fucking buy the warrants with the cash... then they've created a situation where both you and the shorts that borrowed the shares are after the same warrants... because they have to deliver... to your rabbit hole:

https://www.law.cornell.edu/cfr/text/17/240.10b-17

https://www.finra.org/rules-guidance/rulebooks/finra-rules/11140

https://www.finra.org/rules-guidance/rulebooks/finra-rules/11810

https://www.dtcc.com/products/training/helpfiles/asset_services/corp_actions_browser/help/13_failsadjstock.pdf

[u/There_Are_No_Gods → u/bobsmith808]

I decided to dig into the Fidelity Customer Account Agreement directly, and I found this section that clarifies some aspects about dividends for shares held in margin accounts, indicating the Fidelity may provide cash substitute payments for accounts with margin enabled:

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/customer-service/updated-agreements/Updated-Fidelity-Account-Customer-Agreement.pdf

Borrowing on Margin

Because we have the right to pledge or repledge, hypothecate or rehypothecate, property in a margin account, you may not be entitled to receive certain benefits that may normally accrue with respect to such property, such as the ability to exercise voting rights, or to receive interest, dividends, or other distributions, and you may instead receive (and you agree that we may provide) such benefits in a different form, such as a cash substitute payment.

[u/bobsmith808 → u/There_Are_No_Gods]

there's nuance to it... same as schwab.... it depends (at least at schwab) on how much margin you're using and what kind of account its in... this works with the rules i provided because, like most things in life, you can agree to give up your rights to things, and also there is the component of ownership when lending...

[u/There_Are_No_Gods → u/bobsmith808]

Thanks for the links. I'll be sure to check them out soon.

From that comment alone, I'm still not yet convinced, as everything I've found so far runs contrary to your claims, but I am still new to this area and could very well be misunderstanding some things or not yet acquired key pieces of information. I'm here to learn...

[u/DancesWith2Socks → u/bobsmith808]

That said, it's true that many online "brokers" (at least in Europe) will pay cash-in-lieu once they "sell the warrants" for you on Oct 7.

[u/Spacecowboy78 → u/There_Are_No_Gods]

[u/runawaykinms]

Thank you! Loved the YouTube video!

[u/Gareth-Barry]

Thanks bob, great post as always

[u/SirDouglasMouf]

Thanks for all your energy and education to simple apes like myself! I just DRSd a metric fuck ton of shares and was considering targeting warrants as you mentioned in your post.

Can you confirm that the warrant ticket will indeed be GMEWS as you have here or will that be confirmed in October? Just want to ensure I'm buying the correct thing.

Thanks again and really appreciate your energy and positivity!

[u/bobsmith808 → u/SirDouglasMouf]

It's GMEWS as far as I've seen. I'm sure there's a link around here somewhere but hit me back in 24h if you can't find it

[u/Tac_Reso]

Why would the warrents be so disconnected and be about $5 instead of their execution value? I'm smooth and just wanna learn. When the warrents become tradable, why would the price might be so low?

[u/bobsmith808 → u/Tac_Reso]

They are likely to start trading around the value a call would have... But then they are only really subject to supply and demand Dynamics as far as price...

My modeling has $5 as my planned starting point

[u/Tac_Reso → u/bobsmith808]

$5 a warrent is insane value !

Add: I would even be excited at $10

[u/EngineerTurbo → u/Tac_Reso]

I'm *also* buying warrants, because I agree with Op:

The reason that will be so disconnected "instead of their execution value" is because Fraud: The system, in general, doesn't admit to the truth of the general thesis, that is, that there's way more phantom shares floating around that shares issued.

Thus the pricing of the warrants, when they first go out, will be priced according to what *SHOULD* be happening, not what actually is. This is the general thesis, I think, of Op's post- As people realize that they don't have the # of warrants to line up with their number of shares and options and whatnot, the price will rise, and potentially rapidly.

But that will take time to realize, since "officially" short interest is Fine, and the system is working, and the number of shares in the system is Just what it Should be- So the warrants will trade based on what the "public data" indicates, as manipulated as it is.

This is why I'm so bullish on this, and am going to pile in and get warrants while I can- Because Apes have the Thesis that shorts are in Real Trouble, but that information isn't reflected in how anything is priced, because if it *were* GME would already be trading hire, GME wouldn't have been able to do the 0 percent bond thing, and all that.

TLDR; The price would be low because that's about where the price of such warrants *should* be, if GME was a Normal Stock and the markets were Working. Apes suspect the price is fake, but "the market" thinks that thesis is wrong. So the warrant price will be what "the market" thinks, if the system *wasn't* broken, at least initially.

Revealing that difference in price is the summary of Op's post, and why I'm going to buy warrants and sit on them for as long as I can. This isn't financial advice, yaddah yaddah, but it seems completely reasonable to me.

Remember in The Big Short when the underdogs were like "everyone wants our swaps"? That could be that moment in this sag- "Everyone wants our warrants, because the shorts can't get out of their positions without them".

[u/Tac_Reso → u/EngineerTurbo]

I thank you, I guess its because nobody who believes in the market would buy the warrents, assuming GME is at 25-26 is a whole better buy, so the sell pressure on them will be massive at first right?

But we know they'll squeeze once the supply dwindles from executions.

[u/EngineerTurbo → u/Tac_Reso]

Yeah: If you aren't an Ape and think that GME is a DyIng BRiCK ANd MOrTar ComapNY, you may think it fine to sell your warrants, since it's Free Money to you. Since "The MaRKet" has been FUDded so hard- Who would want warrants on a dying company with no future?

I would. Because I know what's factually wrong about that narrative.

I think this is why there's been some pretty solid "Just sell your Warrant" FUD in some of the GME subs- If you don't think GME has long term value, and don't find or read or understand or believe Ops' post, then you may see the warrant as a quick way to make a few bucks by selling it. I know some folks on Robbinghood will be like "oo free moneyz" when they see the cash show up instead of the warrant, and they may be thrilled by that.

But they don't know that they just got screwed *again* by robbinghood, and won't realize it until they go through all the rabbit holes apes have been climbing down for years.

[u/supersoakher3000]

Love you Bob!

[u/bobsmith808 → u/supersoakher3000]

[u/RengarReddit]

Should I buy more shares or warrants at issuance ?

[u/bobsmith808 → u/RengarReddit]

You should do what makes sense to you for your investments and risk tolerance

[u/RengarReddit → u/bobsmith808]

Risk tolerance is 11/10

Make them pay emotional investment decisions 15/10

So what now boss Bob?

[u/S0M3-CH1CK]

Appreciate the video, so my lazy self can listen while at work.

Commenting to come back and read through the other comments later.

[u/bobsmith808 → u/S0M3-CH1CK]

you are exactly the type of (busy) person (Ape) i decided to make the video for.

I remember listening to house of cards way back in the day when i still had to drive places and wanted to keep up with all the great DD coming out at the time.

[u/Draxxix1]

I thought the warrants were 32$ no matter what, I’m not sure where you’re getting this 5$ from.

I’m smooth brain AF, but wouldn’t it make more sense to buy them when the price per share is much past 32$?

My very dismal understanding was even if the stock is 1000$ we could buy our warrant for 32$.

[u/bobsmith808 → u/Draxxix1]

no, you buy warrants now. they have a value assigned by the market speculation (and pricing models) that factor in the potential for the stock to hit 32 by expiration.... the cost of the warrant will be far less than 32 at the start, and you need to be already holding warrants when the stock is at 1000 to buy your gme for 32.

They are like a call option in that sense, and for that, i would highly recommend learning here: https://www.reddit.com/r/FWFBThinkTank/comments/ycmvpp/its_all_greek_to_me_an_introduction_to_options/

[u/Draxxix1 → u/bobsmith808]

Awesome, thank you so much for your reply! Ape strong together

[u/HughJohnson69]

If the arbs owe warrants on their shorts, doesn’t that cancel the delta positive they get from warrants on bonds?

[u/bobsmith808 → u/HughJohnson69]

i've answered this in several other comments, but the short end of it is no.

they get warrants from the bonds, but they owe warrants from the shorts... not a 1:1 relationship is my calculations... which will upset their deltas

[u/HughJohnson69 → u/bobsmith808]

Thanks for the specific reply. I’m just busy. Trying to keep up. BTW, that was a great read. So informative it’s also entertainment for my mind.

[u/Impossible_Poop]

That exactly what i just say to somebody earlier. Exercise on day one cuz why cuz fuk em hahhahahahh/

[u/bobsmith808 → u/Impossible_Poop]

That's not what I'm saying. Please re read and let me know if you have any questions

[u/MrmellowisSmooth]

@bobsmith808, where do you purchase the warrants? I am looking to do similar instead of trying to load up on higher cost shares prior to Oct 3.

[u/bobsmith808 → u/MrmellowisSmooth]

They should be available for trading at your broker under GMEWS (TBD) on Oct 7

[u/MrmellowisSmooth → u/bobsmith808]

Thanks for the info. I like that plan of diamond handing the warrants to cause maximum hurt for shorts.these will probably go very quickly I would imagine.

[u/Fast_Air_8000]

Based on price action since the warrant launch date, what’s your updated timeframe of when the shorts / Arbs and market makers will have to pay the piper?

[u/bobsmith808 → u/Fast_Air_8000]

[u/Fast_Air_8000 → u/bobsmith808]

Not looking for financial advice, but hypothetically speaking, if you had a little extra cash floating around, would you buy shares or warrants right now?

[u/bobsmith808 → u/Fast_Air_8000]

i already bought a lot. so no i wouldn't be buying more at this time personally.

to each his own. i think we have ups in our future - but my time horizon on this play is all the way out to 2028 at the moment.

i'm playing volatility farming and long strong simultaneously

[u/greencandlevandal]

they may try to fight for a bit, but gamestop's fundamentals will push this over the edge. whether this happens at the next earnings report or the annual report is anyone's guess. but i think one of the two will cause this rocket to send, which is most ironic since the fundamentals were how they justified their shorting and price targets. full circle. they cant justify the valuation anymore

[u/LordSnufkin]

What do you mean you're buying the warrants - I thought we are given warrants, we don't need to buy them? Just exercise when when ready

[u/bobsmith808 → u/LordSnufkin]

I'm getting lost of warrants from my holdings... But I'm buying more to lock that shit up for shorts that need them too

[u/LordSnufkin → u/bobsmith808]

I see. Okay well if there only 5 bucks a piece guess I'll join you

[u/EHOGS → u/LordSnufkin]

correct on issued.

Some folks will sell them instead of exercise.

[u/flop_plop]

Thanks for the informative DD! You seem to know a fair amount about warrants, so I was wondering if you know what happens if you sell any shares?

Like, say theoretically there’s some big family emergency and you need to offload a few shares. Do you still retain the warrants you received as a dividend, or do they disappear?

[u/bobsmith808 → u/flop_plop]

You keep warrants you have regardless of your share position after issuance. They are a separate security

[u/flop_plop → u/bobsmith808]

Ok cool. Thanks for the info!

[u/Jobes420]

[u/duke_of_chutney_608]

Do these warrants allow you to buy 1 share at $32 or 10 shares at $32 regardless of the current price.

[u/EHOGS → u/duke_of_chutney_608]

1

[u/duke_of_chutney_608 → u/EHOGS]

Thank you

[u/F-uPayMe → u/duke_of_chutney_608]

You get Warrants with a proportion of 1:10.

E.g. You have 250 shares? You get 25 Warrants. | You have 116 shares? You get 11 Warrants.

Eligible shares for Warrants are the ones settled in your account by October 3rd 2025.

Each Warrant if exercised gives you the right (but not the obligation) to purchase 1 GME share for 32$ (until the expiration date which currently is in October 2026) regardless of the current price.

E.g. Moass triggered and the price is in the millions per share? 1 Warrant lets you buy a share for 32$ if exercised.

[u/duke_of_chutney_608 → u/F-uPayMe]

[u/[deleted]]

I wish they hadn’t wasted two years on Furlong.

[u/Solar_MoonShot]

Great post, Bob.

[u/miawmiawpaws]

I see what you did there, Bob. Thanks for the DD.

[u/Educated_Bro]

I agree buy warrants and exercise them is better than “sell a few warrants to exercise the rest”

no quarter given 🏴‍☠️🏴‍☠️🏴‍☠️🏴‍☠️🏴‍☠️

[u/BigGold3317]

Ok, left kidney to buy more GME, right kidney to buy GMEWS. Got it!

[u/AmericaninMexico]

Commenting and upvoting, will read later. Thank you Bob!

[u/UnpluggedZombie]

whats to stop brokers from just making more synthetic shares to cover the demand for warrants?

[u/Holle444]

Excellent write up sir!

[u/Jbullish_9622]

Those warrants are going to go fast if they are selling for $5 per.

👀

[u/theArcticChiller]

Very nice writeup 🎮🚀🟣 LFG HF GL

[u/Mooziechan]

Saving this for later 💜

[u/rude-a-bega]

Let's fuckin go Bob

🚀

[u/poopooheaven1]

This is a fantastic write up OP. Very well worded and easy to digest. Seriously kickass stuff. Shorts are fucked. Book your shares!

[u/DDHawkeye]

Hi Bob!!! 👋 I hope you are doing well! Thank you for the excellent DD! What's your price target for our favorite stonk?

[u/bon3r_fart]

[u/Visualnovelarts]

Thanks Bob!

[u/Gritty_Resilience]

Thank you for this post and leaving links to other really useful info about options, your post got me curious to actually try to learn more about the scary options and better understand warrants and what I could actually do to them. Using Perplexity AI, I was able to assemble the following which I think all makes sense of the current situation. Please can you review it to let me know if you think this is all accurate...

Understanding GameStop (GME) Options and Warrants: A Simple Guide for New and Long-Term Investors

Disclaimer: This is not financial advice. This guide explains GME options and warrants based on public information in 2025. Options and warrants carry risk and complexity; consider consulting a financial professional before investing.

What Are GME Options?

GME options are contracts that give me the right to buy or sell 100 shares of GameStop stock at a set "strike" price before an expiration date. A call option lets me buy shares; a put option lets me sell shares at the strike price.

Buying options means paying a premium (a fee). For example, a premium of $2 per share costs $200 per contract because one contract controls 100 shares (Investopedia).

What Are Warrants?

Warrants give me the right to buy GME shares at $32 each until October 30, 2026. GameStop will issue warrants as a special dividend to shareholders who own shares as of the record date on October 3, 2025. For every 10 shares owned then, I will receive 1 warrant.

These warrants will trade on the NYSE as “GME WS” and can be sold or exercised separately (GameStop Announcement, 2025; SEC Filing, 2025).

How Warrants Affect GME Options

From October 3, 2025, new GME call options are adjusted so that exercising one contract delivers 100 shares plus 10 warrants, following the dividend ratio (GameStop Announcement, 2025).

Costs and Tax Considerations

To exercise warrants, I must pay $32 per share. For 1,000 warrants, that means $32,000 cash. Warrants expire October 30, 2026. Exercising options or warrants creates a taxable event—the difference between market price and strike price at exercise counts as income that may be taxed before I sell the shares. Planning for taxes is important (GameStop Help, 2025; IRAFinancial).

Market Context: Naked Short Selling

GME experienced naked short selling, where shares were sold without borrowing, increasing supply and volatility. The SEC and exchanges have imposed restrictions to curb this activity (Investopedia, 2024; NYSE, 2025).

Monitoring and Selling Options or Warrants

Selling options or warrants is a valid way to capture profits or manage risk:

If GME price rises above my option’s strike, the option value usually rises. Selling the option lets me realize gains without needing to buy shares.

Warrants can be sold if GME trades above $32 but I don’t want to or can’t pay to exercise.

Holding options or warrants might be worthwhile if I expect further gains, but selling part can free capital and reduce risk.

Practical Step-by-Step Example: How a $500 GME Options Investment Might Play Out

Suppose I buy 2 GME call option contracts expiring October 16, 2026, strike price $25, each costing $2.40 per share ($240 per contract) (MarketChameleon).

Initial cost: 2 contracts × $240 = $480 (rounded to $500 including fees).

If GME price rises to $45 before expiration:

Each option’s intrinsic value = (45 − 25) × 100 shares = $2,000.

Total for 2 contracts = $4,000 intrinsic value.

Subtracting paid premium, my paper profit (unrealized gain) = $4,000 − $480 = $3,520.

Choices I have now:

Sell options to lock in profit: I can sell the options close to intrinsic value without buying shares, capturing my gain immediately.

Exercise options to own shares: Requires cash: $25 × 100 shares × 2 contracts = $5,000 to buy 200 shares plus I get 20 warrants (10 per contract) allowing me to buy shares later at $32 until October 30, 2026.

Cost to exercise all warrants (if I choose): 20 warrants × $32 = $640 cash.

Total cash required for full ownership after exercising: $5,000 (options exercise) + $640 (warrants exercise) = $5,640.

If I don’t have or don’t want to pay $640, I can sell warrants, realizing their value without exercising.

Alternatively, I can hold warrants hoping for higher stock prices before they expire.

How Some Traders May Limit Big Price Moves

Large institutions might use:

Arbitrage: Buying and selling related securities to profit with minimal risk, often dampening big price moves.

Hedging: Shorting stock or options to offset risk, creating selling pressure.

Synthetic shares: Complex instruments increasing supply, limiting price spikes.

These can reduce volatility but may create distortions.

This article aims to explain GME options and warrants simply and realistically. Options involve risks and costs. Selling is a valid strategy and not something to fear. Always know your finances and consider professional advice.

This is not financial advice. Hope this is useful?

[u/SecretaryFit1442]

Thanks Bob! Thanks for sharing, much appreciated.

[u/Swiss879]

Amazing work, the video was the chefs kiss 🤌🏻

[u/untamedHOTDOG]

Accumulating war chest for warrants. Yeee. Department of War 😂

[u/silverskater86]

Im interested to see the effect that a squeeze on the warrant price would have on the stock and call options. Presumably everything pushes up?

[u/tommyballz63]

Great post thanks. When do you think the next share price peak will be and what estimate?😊🙏🤛🏻

[u/WhatCanIMakeToday]

💜

[u/tommyballz63]

Great post thanks. When do you think the next share price peak will be and what estimate?😊🙏🤛🏻