Thanks for this conversation between you and hershey101. I have one related question to see if I am understanding the situation correctly. I don't want to get involved in any shorts or anything like that.
I am trading in a 401k retirement account so no capital gains to consider. The only things I am interested in are warrants and common stock. Currently I have a bunch of common stock. If I understand correctly I have 3 options for trading CCIV on Schwab but I will just focus on the common stock or warrant:
- CCIV (Class A Stock) Closed Yesterday at $30.22
- CCIV/WS (Warrant Exp 8/4/25 with $11.50 strike price) Closed yesterday at $13.20
If I plan to buy now and hold long term, it seems like the real cost of each share is currently
- $30.22 (Just a regular share)
- $13.20 + $11.50 = $24.70 (Simply the warrant + strike price)
Do I understand that correctly? There may be some nominal fee in cashing in the warrants but that is the general situation right?
If that is correct then I must also consider the downside with each type of share. The common stock could drop to $10 and the warrant could expire and go to zero:
- $30.22 - $10 = $20.22 (The common stock has a floor of $10 so the downside is $20.22 from the current price)
- $13.20 (The warrant just expires and you get nothing).
So under the assumption that I plan to hold long term, why would I want to buy anything besides warrants? The upside is higher and the downside is lower.
The only reason I can see to buy common stock is to day trade. Is that correct? Or am I missing something? I ask because I currently have a decent sized position (for me anyways, I know there are some high rollers on here) in common stock that has appreciated over 200% at this point. I am thinking I can take some profit on the next surge then wait for the next dip and buy warrants to hold rather than more common stock.