What other tech stock to consider?

[Boomer19]

cciv taking off again. halted twice, currently up to $53.90 and 34.82%

didn’t see related news yet confirming anything

 

[bkp_duke]

And there it is. CCIV exploded!

Looks like trading suspended as well.

 

[ZeApelido]

lol how did my CCIV position zoom past my bitcoin position.

 

[chronoreverse]

I don't see any actual news. I wonder who put in the giant buy that jumped the price. But if the deal is announced after hours, there's no way this won't jump even more right?

 

[golfcart]

I think it is all based on this from Reuters

Exclusive: Lucid Motors nears SPAC deal as Klein launches financing - sources

Warrants up 50% right now to $27.81 they got as high as $33 at one point. I unloaded a bit, hopefully don't regret it.

 

[bkp_duke]

I think it is all based on this from Reuters

Exclusive: Lucid Motors nears SPAC deal as Klein launches financing - sources

Warrants up 50% right now to $27.81 they got as high as $33 at one point. I unloaded a bit, hopefully don't regret it.

I know the SPAC merger is a risk, but I think I'm going to ride this one out and sell sometime after Lucid goes public. Might be a mistake, but we'll see.

 

[c041v]

Well, looks like I am into CCIV. I feel late to the party, but I actually like the Lucid quite a bit, and agree with some others here that the price could really run given where we've seen other EV valuations at lately.

edit: I really liked some of the earlier discussion on this, but I'm not sophisticated enough to capital on the Warrant Arbitrage and was waiting for some cash to free up some TSLA covered calls (now closed) as well as distracted by my day job... oh well.

 

[Tes La Ferrari]

I know the SPAC merger is a risk, but I think I'm going to ride this one out and sell sometime after Lucid goes public. Might be a mistake, but we'll see.

My plan too, for now. (May consider some profit taking if the run up goes too ballistic in a short period, but we'll see).

Hope our plans age well.

 

[pz1975]

Warrants are still crazy underpriced for CCIV.

I was able to roll my arbitrage trade (explained previously) today and have a much higher maximum profit potential now ($44.7/share vs. $27.7/share previously) while still having very low risk and even less now with the odds of someone exercising my new sold calls ($57.50 average expiring Jan/22) much lower now. My "maximum loss" is now $1.30/share and in that scenario I would still get all my warrants for free.

 

[ckessel]

Warrants are still crazy underpriced for CCIV.

I have read the previous posts and I'm still confused on how a warrant works.

Let's take this instant in time. CCIV is 52.8 and CCIV/WS is 31.

If I buy a CCIV/WS at 31, that lets me do what exactly? I can exercise it to buy a share, not now, but at some point in the future? I assume it's not now or I'd just buy at 31 and immediately exercise and sell for 52.8, repeat until I ran the world out of money.

Edit: ok, I found a website explaining it. You can exercise CCIV warrant for $11.50 to get a stock. In which case...yea, that seems crazy. The gap between warrant and CCIV is ~$21, which is way higher than the $11.50 it costs to exercise. However, looks like you'd have to call your broker to exercise, so it doesn't turn around all that fast relative to regular options. Still, seems like a huge difference.

Still trying to understand how warrants exercise though. Searching for "CCIV warrants" I found the $11.50 strike, but I can't find anything about when the warrants would expire. Or if there is some restriction about exercising them?

 

[chronoreverse]

Can I confirm that if I purchase a warrant for $30 that has an exercise price of $11.50, then that means I could pay an additional $11.50 to turn it into one share at whatever price it was?

Therefore if the share price is $41.50 or higher, then I'd "win". Would anything at this point be taxed?

[edit]Shoot, the market is already closed
My broker labels it as "CHURCHILL CAPITAL CORP IV WT 8/4/25"
Does that mean the expiry date is in 2025?!? That makes this even more underpriced. Is there something we're missing here if it's really true that they're close to a deal?

Here's the filing (reading it now):
tm2020647-6_s1 - none - 15.3296902s

if, and only if, the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.

CCIV crossed $18 on January 22 and hasn't dropped below since. If this continues to this Friday, February 19, then it'll trigger the redemption notice:

"The warrants will become exercisable on the warrant exercise date, which is the later of: 30 days after the completion of our initial business combination; and 12 months from the closing of this offering;"

Which means you'd still have to wait another year at least (which could be a very good thing).

But there's this:

We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to: (1) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so (2) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (3) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.

At which point my brain locked up but it does mean that you're not screwed, just that CCIV (hopefully Lucid) can opt to not let you keep holding it until expiration if the main stock price is skyrocketing.


[edit2]I have no idea how this actually works and I'm probably taking snippets out of context. Please read the filing yourself before coming to any conclusions

 

[juanmedina]

Warrants are still crazy underpriced for CCIV.

I was able to roll my arbitrage trade (explained previously) today and have a much higher maximum profit potential now ($44.7/share vs. $27.7/share previously) while still having very low risk and even less now with the odds of someone exercising my new sold calls ($57.50 average expiring Jan/22) much lower now. My "maximum loss" is now $1.30/share and in that scenario I would still get all my warrants for free.

can you please expand on the warrants still underpriced and how it is still financially worth it? I bought some shares that I will probably loose because I have March $50 covered calls but I would like to get a bigger long term position.

 

[ckessel]

Warrants are still crazy underpriced for CCIV.

I was able to roll my arbitrage trade (explained previously) today and have a much higher maximum profit potential now ($44.7/share vs. $27.7/share previously) while still having very low risk and even less now with the odds of someone exercising my new sold calls ($57.50 average expiring Jan/22) much lower now. My "maximum loss" is now $1.30/share and in that scenario I would still get all my warrants for free.

Since (based on chronoreverse's post) it looks like you can't exercise until 1 year from the merger, that means you'll have a window where you'd be on the hook for the calls, but couldn't yet exercise the warrants?

I haven't thrown any money at this since I don't fully understand it yet, but is the following correct? I'll do some rounding for easy math:
* Buy 100 warrants for ~$30 each
* Sell 1 Jan 23 $60 call strike for ~$28 (that's the only one past the 1 year merger date, assuming it merges)
* If the stock is > $60 in 2 years, make $46.50 dollars profit per warrant ($30 outlay - $28 calls = $2 cost. Warrant profit $60 - $11.50 warrant exercise = $48.50. Total profit: $48.50 - $2 = $46/warrant

Or 23x return potential. I feel like I must have missed something or some algo bots or people much smarter than me would have snarfed every last warrant they could get their hands on.

 

[pz1975]

I have read the previous posts and I'm still confused on how a warrant works.

Let's take this instant in time. CCIV is 52.8 and CCIV/WS is 31.

If I buy a CCIV/WS at 31, that lets me do what exactly? I can exercise it to buy a share, not now, but at some point in the future? I assume it's not now or I'd just buy at 31 and immediately exercise and sell for 52.8, repeat until I ran the world out of money.

Edit: ok, I found a website explaining it. You can exercise CCIV warrant for $11.50 to get a stock. In which case...yea, that seems crazy. The gap between warrant and CCIV is ~$21, which is way higher than the $11.50 it costs to exercise. However, looks like you'd have to call your broker to exercise, so it doesn't turn around all that fast relative to regular options. Still, seems like a huge difference.

Still trying to understand how warrants exercise though. Searching for "CCIV warrants" I found the $11.50 strike, but I can't find anything about when the warrants would expire. Or if there is some restriction about exercising them?

You have the math right - it is a massive discrepancy. The limits on these warrants are that they can’t be exercised until 1 month after the merger is done or Sept 30, 2021, whichever is later. That is why me rolling my sold calls to Jan/22 was key so I won’t have to deal with the calls expiring in the money before I can exercise the warrants. I fully expect the merger (with Lucid presumably) to be done before January 2022. Again my profit on this trade for any SP above $57.50 in January 2022 is $44.7 per share. If I started the trade today, that would be even higher. I am considering doubling up the arbitrage trade tomorrow depending on how much margin I have (sold calls can’t be covered by the warrants).

 

[chronoreverse]

What happens if the merger doesn't go through and the warrant is effectively worth nothing in your scenario?

 

[pz1975]

can you please expand on the warrants still underpriced and how it is still financially worth it? I bought some shares that I will probably loose because I have March $50 covered calls but I would like to get a bigger long term position.

@ckessel did the math above explaining the discrepancy. Basically the warrant price + 11.50 (exercise price) ‘should’ = the stock price. Because the warrants have limitations for exercise, they are worth less than this but the difference is tremendous and more than I would ever expect and thus has created IMO. an amazing arbitrage opportunity. I explained my arbitrage trade in detail around 2 weeks ago in this thread.

 

[pz1975]

What happens if the merger doesn't go through and the warrant is effectively worth nothing in your scenario?

If there is no merger than the warrant still has value - doesn’t expire until 2025. If worst case scenario the share price drops back to $10 then the warrant is still probably worth $1 or something. With my arbitrage trade, I would basically be getting these warrants close to free if this happens and my trade would be break even.

 

[ckessel]

You have the math right - it is a massive discrepancy. The limits on these warrants are that they can’t be exercised until 1 month after the merger is done or Sept 30, 2021, whichever is later. That is why me rolling my sold calls to Jan/22 was key so I won’t have to deal with the calls expiring in the money before I can exercise the warrants. I fully expect the merger (with Lucid presumably) to be done before January 2022. Again my profit on this trade for any SP above $57.50 in January 2022 is $44.7 per share. If I started the trade today, that would be even higher. I am considering doubling up the arbitrage trade tomorrow depending on how much margin I have (sold calls can’t be covered by the warrants).

_mind blown_ I'm going to go scrounge my couch cushions for extra change.

That Sept 30th, 2021 number. The bit chronoreverse mentioned:

"The warrants will become exercisable on the warrant exercise date, which is the later of: 30 days after the completion of our initial business combination; and 12 months from the closing of this offering;"

So, the "closing of this offering" already happened on Sept 30th of 2020? I wasn't sure what "closing of this offering" meant as far as a legal date.

 

[pz1975]

Since (based on chronoreverse's post) it looks like you can't exercise until 1 year from the merger, that means you'll have a window where you'd be on the hook for the calls, but couldn't yet exercise the warrants?

I haven't thrown any money at this since I don't fully understand it yet, but is the following correct? I'll do some rounding for easy math:
* Buy 100 warrants for ~$30 each
* Sell 1 Jan 23 $60 call strike for ~$28 (that's the only one past the 1 year merger date, assuming it merges)
* If the stock is > $60 in 2 years, make $46.50 dollars profit per warrant ($30 outlay - $28 calls = $2 cost. Warrant profit $60 - $11.50 warrant exercise = $48.50. Total profit: $48.50 - $2 = $46/warrant

Or 23x return potential. I feel like I must have missed something or some algo bots or people much smarter than me would have snarfed every last warrant they could get their hands on.

Your math is good but you’re wrong about the exercise. It’s the later of 30 days post-merger and 1 year from when the SPAC was developed (Sept 30, 2020). So it’s not 1 year from merger. I chose January 2022 for my sold calls for this reason as I want to get the sold calls close to but after the date I expect to be able to exercise the warrants (Sept 30, 2021).

 

[pz1975]

_mind blown_ I'm going to go scrounge my couch cushions for extra change.

That Sept 30th, 2021 number. The bit chronoreverse mentioned:

So, the "closing of this offering" already happened on Sept 30th of 2020? I wasn't sure what "closing of this offering" meant as far as a legal date.

Yes. The offering is when CCIV shares were first offered.