Free course · Lesson 11 · 4 min
Warrants: strike, expiry and who decides to exercise
In 4 minutes: what a warrant is, who decides to use it, and why its strike turns into a price level.
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01A right to buy new shares
A warrant is the right to buy new shares from the company at a fixed price, the strike, until an expiry date. The company issues it, so using it creates new stock.
02Where PNDA’s warrants came from
Small caps often hand warrants to the buyers of a deal, on top of the shares. PNDA gave one with each share of its July PIPE.
- Jul 28PIPE: 1.20M shares at $2.75, plus 1.20M warrants at $4.50
- Aug 18Resale effective: shares from an exercise can be sold at once
- TodayPNDA at $3.42, below the strike
- Jul 28, 2031Expiry: warrants not used by then are gone
03The holder decides, not the company
Exercising means paying the strike to get new shares. The holder chooses if and when, and can then sell them.
04Below the strike, a warrant sleeps
Nobody pays $4.50 for a share that trades at $3.42. Both of PNDA’s strikes sit above today’s price.
Both series sleep today. The $4.50 one is within reach of a run.
05Above the strike, sellers show up
Above $4.50, a holder can pay $4.50, get a new share and sell it higher. So sell orders tend to appear just above a strike.
06Too far away to count
A strike many times above the price rarely matters for today’s trade. Panda Desk folds those rows into one line.
073 checks for any warrant
Sources
- Form 8-K, Item 3.02: unregistered sales of equity securities, the item that reports a PIPE and the warrants sold with it.
Panda Desk shows these rows for any small cap, next to your montage. tspanda.com
Not financial advice. PNDA is fictional, and nothing here is a recommendation to buy or sell.