SPAC Warrants FAQ
What are SPAC Warrants?
SPAC Warrants are basically contracts that allow you to redeem them to gain a SPAC equity share. This typically is a 1:1 exchange. A merger must be finalized for some one to redeem the warrants. If a merger fails to happen, the warrants can be worthless.
Why are they so much cheaper compared to the equity?
When redeeming a warrant, you must pay a strike price per warrant. The strike price is typically around $11.
So let's take SHLL for example.
SPAC Warrants are basically contracts that allow you to redeem them to gain a SPAC equity share. This typically is a 1:1 exchange. A merger must be finalized for some one to redeem the warrants. If a merger fails to happen, the warrants can be worthless.
Why are they so much cheaper compared to the equity?
When redeeming a warrant, you must pay a strike price per warrant. The strike price is typically around $11.
So let's take SHLL for example.
- The price of the equity is $31.
- The price of the warrant is $20.
- Let's assume a merger has happened, and you would like to redeem the warrants. This would cost you $20 plus $11 (strike price) so $31. Which perfectly matches the equity.
Are warrants tradeable like regular stocks?
Yes, warrants trade just like regular stocks so you do not have to redeem them. You can simple buy and sell them like regular equities. Unfortunately, they are not currently available on Robinhood.
Ask any additional questions you have in the comments below 😀
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SPAC Central
| Created By: | Maverick |
| Created: | Jun 21, 2020 |
| Total Followers: | 7 |
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SPACs ("Special Purpose Acquisition Companies") are blank check companies that have cash in them and are seeing a target to acquire. These can be fun because it's a 🕵️♀️ game of who they're going to acquire. It can be profitable if the target company ends up being something in a hot space.
Make sure to do your DD on management behind the SPAC, cash position, and target sector.
Make sure to do your DD on management behind the SPAC, cash position, and target sector.