how does warrants exercise price affect stock price in short term?

J

Jason11111111

suppose a person has 100,000 units of warrants, exercise price at $3.25
current price at $3.

by exercising the share warrants, he would have to pay $3.25 a share.
technically he would exercise only if the price is $3.26 or above.
factoring in brokerage fee & usually warrants are given to founders with huge position size affecting the stock price when he sell out all the warrants . it would ideally exercise at a much higher price to profit from it with a margin safety.

so why do some people say that warrants exercise price will act as resistance price for the share price?
 
Your example does not disclose the date they expire and if they can be exercised early. Basically no one would do what you said while OTM. They are priced like options that you can’t easily short.
 
Jason11111111 said:
it has 5 years expiry date from the day it announce news.
and the people are saying warrants exercise price act as resistance today.
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They are saying as the warrant goes in the money some players might short the stock vs the long warrant. Make more of a difference with small cap stocks.
 
if i was long warrant i just forget about then if it was 10 through at the end of the day call up short warrant and demand auto exercise
 
look please put risk an execution on the line in ssl encryted format that cannot be decoded due to prime numbers. most new quants in banks say python is the one and on the line is instant
 
Jason11111111 said:
Can u elaborate on that? Don't quite get it
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"some people say that warrants exercise price will act as resistance price for the share price?" This is no different from a block of 5-year call options with a strike price of $3.25 except they are hard to short and call are not. Some will hedge with short stock, some won't. As the stock goes up the hedge ratio of the stock goes up like a call.
 
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