strategic trader playbook

STRATEGIC TRADER PLAYBOOKStrategic Trader

Strategic Trader Playbook

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David Forest here, editor of Strategic Trader. If you’re a new reader, I’d like to formally welcome you to Strategic Trader, where our mantra is, “unlimited upside, capped downside.”

As a professional geologist with over 20 years of experience in development, finance, and analysis of natural resource projects, my bread and butter is resources… and the trends that cause those resources to skyrocket.

And every month, senior analyst John Pangere and I will team up to bring you a new pick in an industry that is really picking up steam…

John’s got an engineering degree from Purdue University and managed multimillion-dollar construction projects at his family’s business before switching to finance.

He’s also a former investment banker, where he worked on late-stage venture deals and with early stage startups. John has successfully traded currencies, futures, options, and invested in stocks and real estate for years.

If that’s not enough, John’s also a Chartered Financial Analyst (CFA), one of the most difficult designations to achieve in finance. He’s done just about everything in the investing world… and he’s the mastermind behind our wildly successful T-U-V system (more on that below).

Most often, the picks we bring you each month will be warrants.

For those of you who don’t know, warrants are an essential tool for us to book massive winners – without putting as much upfront capital at risk as we would with buying shares of stock outright.

And now, John will take you through our Strategic Trader Playbook… which highlights the “Strategic Instinct”… the three categories of strategic trading we’ll be doing… and we’ll close with our frequently asked questions.

Remember, you’re well on your way to unlimited upside, capped downside with your subscription to Strategic Trader. Thanks for joining us.

Keep walking the path,

David Forest Editor, Strategic Trader

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On April 20, 2010, I ( John Pangere) remember seeing the horrible news roll across the screen. That day the offshore drillship Deepwater Horizon exploded in a fury. The resulting destruction lit up the Gulf of Mexico like brushfire in a forest.

It was a shock not just to the people involved, but to the oil industry as a whole.

Environmental groups were shouting to stop all offshore drilling even with the blaze still visible from ashore. Coming from an engineering and construction background, I know that accidents are bound to happen. No matter the industry or type of job, it’s just a fact of life.

However, the whole market abandoned shares of Transocean (RIG), the drillship’s owner.

But what I understood at that moment that environmental groups never seem to get was that our need for oil wasn’t going to change.

In fact, it was accelerating. Amid all the carnage, something told me I needed to make a big bet on Transocean’s recovery.

Over the next few months, I waited patiently, studying the company’s every move. Finally, on July 30th after shares had fallen in half, I pulled the trigger. It was, at the time, the largest single bet I made on any trade. I bought shares of RIG for $45.68 per share. They never looked back and I eventually sold nine months later for a 71% profit.

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Investors eventually came around to the fact that while the Deepwater Horizon accident was a mess, it wouldn’t sink the company. In fact, Transocean was, and still is, the top offshore drilling company in the world.

Looking back on it now, I know that the decision to buy RIG shares was due to something I call “strategic instinct.”

In the years since that RIG trade, I’ve codified this instinct. I now consider it my edge – the special “filter” I have on the markets that no other trader can match.

Some might chock it up to pure dumb luck. Sheer chance.

They’d be wrong.

That “strategic instinct” is the driving force behind everything we do here at Strategic Trader. And I’ll explain everything you need to know right here in this playbook.

THE STRATEGIC INSTINCT When you’re defining a stock-picking strategy, the word “instinct” traditionally isn’t part of the equation. People don’t normally place thousands of dollars on a trade based purely on instinct.

But the type of instinct I’m talking about isn’t sheer guesswork or the rolling of dice.

There’s only one way you develop strategic instinct: through new experiences.

Let me explain...

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Most people don’t like new experiences – they don’t like to be uncomfortable. But what most people don’t realize is that on the other side of their comfort zone is where opportunity – and often wealth – lies.

Think about it. Everyone has fears – fear of loss, rejection, inadequacy, missing out, losing control, etc. For our entire lives, these fears influence every single decision we make. They’re the subconscious motive behind why we so often say, “no” instead of “yes” when an opportunity presents itself.

Think about the last time you built up the nerve to say “yes” to a major venture outside of your comfort zone. I bet it opened a whole new world of opportunity for you. You probably even learned something new about yourself.

The trouble is, most people avoid these scenarios out of fear. Which is unfortunate, because in my experience, it’s the key to developing strategic instinct, especially with respect to the markets.

But not me. As far back as I can remember, I wanted to know how things worked. I had to try everything for myself. I even went so far as to earn my pilot’s license before graduating high school.

Strategic Trader senior analyst John Pangere in the cockpit

It’s also a reason I have an engineering degree. I’m naturally curious and learning how to put things together satisfied that need.

But I wanted to know more. Not just about how things work, but how to keep – and even increase – the fruits of my hard work. That’s one reason I became interested in stocks and the financial markets.

It took years of self-study to develop my strategic intuition. I spent countless hours taking shots, going to annual meetings, and listening in on earnings calls.

I didn’t just want to learn about an individual business though. I wanted to know how that business functioned down to the most minute details.

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Let me give you an example…

Back in 2018, I had an instinct that our economy was close to topping out. After studying and watching how governments reacted to downturns over the previous 20 years, I knew the next crash would bring even bigger bailouts and money-printing than before.

So I wanted to more closely study sectors that would surge in the next crisis.

When I want to know the answer to a question like this, I don’t just pick up a book. I get on the phone reaching out to contacts I’ve met over the years. Then I get on a plane and go. I keep asking questions until I get the pieces of the puzzle needed to make a decision.

In this case, I went on a tour of silver mines in Mexico. I needed to understand how the business works and how to spot clues of what companies to avoid. More importantly, with more stimulus was on the way, I wanted to speculate in businesses that would hand me a financial windfall.

Over time, I had winners and losers. In fact, I still hold some of those companies today. What I couldn’t have predicted back in 2018 was a worldwide pandemic leading to record amounts of stimulus.

But it was my curiosity and instinct that prepared me for what eventually happened.

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Over time, I started to develop a knack for getting it right. But more importantly, I knew which factors to look for and which ones to ignore.

The truth is: Over years and years of testing my own hunches and ideas, I started to notice patterns. Predictable patterns and outcomes I could suddenly see well in advance, because I’d seen them before. And I developed strategic maneuvers to profit from those patterns time and time again.

As I’ll show you below, all of my ideas over the years fall into distinct categories. They’re the same tools I use today to uncover all of the massive money-making opportunities you’ll encounter in Strategic Trader.

THE CATEGORIES OF STRATEGIC TRADING Each of these categories has specific trading strategies that you’ll need in your arsenal. These are the same techniques I use in my own trading. All of them are critical to making money in today’s market environment.

That’s because, like it or not, there’s a war being waged against your financial future. Market crashes, inflation, deflation, high-speed supercomputers, and Wall Street insiders all try to get between you and your money every business day.

This doesn’t mean it’s all doom and gloom. In fact, we see serious opportunity in the years ahead. An era where strategic traders will make an absolute killing.

But this does mean that the era of “easy money” is over.

And it’s never been more important to be selective in your investments. Not only that, you need to have a true game plan. You need to have multiple ways to profit.

Passive investors will get crushed.

Strategic Traders will thrive.

And with our proven system, we’ll come out on top no matter what happens in the markets.

The categories are:

1. Strategic Trades

2. Unusual Value

3. Home Run Bets

Let’s look at each individually…

Please note: For more details on the specific trading strategies we use in each one, be sure to check out our Strategic Trader Master Course. We walk you through specific trades, how to buy each security, and much more.

https://members.caseyresearch.com/strategic-trader/training-videos/

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#1) STRATEGIC TRADES In this category, we can make fortunes by looking at companies with high growth potential or in the midst of a turnaround.

Take the offshore oil business, for example. In the late 2000s, oil shot up to triple-digit prices. Offshore oil exploration companies spent tens of billions hunting for the next great discovery. While executives threw any amount of money necessary at finding oil, investors paid any price for shares.

Then in 2010, one offshore oil rig exploded. For the next six years, stocks of offshore oil companies fell lower and lower. The companies that service those offshore rigs fell in most cases to zero. Business was so bad companies pulled tens of billions in equipment out of the water and warehoused it.

With rigs sitting in storage, companies could not pay back their loans. Most went bankrupt as they hit the bottom of the cycle.

Here is where massive opportunity lies.

As these companies emerge, many offer something called “warrants” to sweeten the opportunity for new investors. And some investors sell these warrants into the open market.

The same is true for small companies looking to grow…fast. Sometimes when they need to raise capital, investors need a kicker or a “sweetener” to compensate them for the risk. So these companies issue warrants. In many cases, early investors sell these warrants to take some money off the table and reduce risk.

This is how we capitalize in Strategic Trader.

Buying warrants is a key part of what we do, and it’s critical that you know what they are and how they work.

What Is a Warrant?

A warrant is a security that gives the holder the right (but not the obligation) to buy a share of stock at a fixed price at any time during a pre-determined period.

In simpler terms, they’re an ideal way to make more money than by buying a stock outright… and you can purchase them for much cheaper (more on that in a bit).

Now, some people will say warrants are like options. They have similarities... But there are two major differences.

One, warrants are issued by the company itself, not a third party like an exchange. The second difference is gains.

Warrants are much more lucrative.

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As I mentioned earlier, warrants help “sweeten the pot.” They’re an incentive created by the company to induce investment support at a time when support is thin. That can mean a tough time in the industry (think banking in 2010, offshore oil in 2017, or gold mining in 2015)... or it can be company-specific.

Either way, they’re an essential tool for traders that many investors don’t even know exist.

And here’s the best part: Anyone with a brokerage account can buy them. No options agreement, no margin account, and no special accredited status.

They can be bought and sold just like a stock. And they often produce far greater returns, offering leverage to a rising stock price.

To find the best warrants to buy, we have a proprietary system.

You see, we have a unique way to determine the safest ones with the most upside potential: We call it our “T-U-V” system. It stands for Time value, Underlying stock potential, and Volume.

Before we consider any warrant trade, we need to make sure all three criteria are met.

Let’s break it down.

T: Time value – Time is money, and we want to get a free ride on the cheap. Our “sweet spot” is warrants that expire in three to five years. As we mentioned above, we want to give them room to run. Getting in at the right time is imperative. The difference between two months could cost you thousands.

U: Underlying stock potential – We need to see that the underlying stock is strong and has big upside ahead. We don’t buy any warrants on a stock that we wouldn’t consider buying on its own.

V: Volume – We eliminate even the best warrants if they don’t trade. Some don’t have enough outstanding and others are locked up in a few hands. We discard those even if they’re valuable.

With our system, we’re able to pinpoint the very best warrants to own.

And again, we don’t consider any warrant unless it passes this test.

Warrants are a great way to speculate, but you can’t put all your eggs in one basket. That’s where our other two categories come in…

#2) UNUSUAL VALUE In this category, we’ll be buying high-upside stocks that offer unusual value.

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This has nothing to do with being a value investor. That type of investor usually ends up in value traps. That’s when a stock buyer thinks a company is cheap, falls in love with it, and watches it get cheaper and cheaper. Unusual values show up in the market all the time.

Since these trades are almost always out of fashion, nobody pays much attention. We put these opportunities in a separate place to make sure we see them for what they are.

Value is too hard to judge. Unusual value is easy to spot.

Let’s look at an example…

In April 2017, I bought shares of a little known company in a boring business. Most investors overlooked the company, Site One Landscape (SITE), a landscape supply company. At the time, the shares traded for around $47.

The company had a simple plan: build the first true national landscape supply business by acquiring small, local operators. It’s what people in the industry call a roll-up. The reason most investors stay away from roll-up strategies is because they don’t always work out. Usually, companies load up with debt, overpay in acquisitions and find themselves in some trouble.

But in this case, I knew something different. The team behind Site One did it successfully before in the building supply industry. Sometimes, having the right team in place makes all the difference. That was the case with Site One. The bet paid off and I cashed out with a 78% return in less than three years.

Spotting unusual value is not just about once-in-a-generation market opportunities. Sometimes a stock sits idly in the market, overlooked by Wall Street just waiting for someone to figure out how undervalued it is.

The landscape supply business is boring by most accounts. When steady and boring offer that kind of upside, we call it unusual value. However, the next category is something that can offer as much as 10-to-1 returns when everything lines up…

#3) HOME RUN BETS Strategic Trades give us a chance to speculate with less risk. Unusual Value gives us opportunities to profit from overlooked opportunities.

But Home Run Bets give us massive upside in small companies on the verge of breaking out.

It’s a critical part of being a strategic trader, but it doesn’t come around as often as the opportunities we’ve covered so far.

You see, sometimes an opportunity comes along to speculate on a big upswing.

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We call this category home run bets because these investments can give us a shot at a 10-to-1 return. That should turn 1% of an account into 10%.

It’s foolish to think this is the way to invest in the market all the time. Only beginners think the market is a place to get rich overnight. But if we see the right opportunity, we have a chance to multiply an investment many times over.

That’s why we focus on small companies with massive upside. Many of these bets are so small, they trade on the OTC (over-the-counter) market.

When stocks of tiny companies rally, they move with a pace unlike anything you’ve seen before.

That’s why risking a small amount of money can bring in fortunes.

The perfect example is a company called Maxar Technologies (MAXR). Most investors have probably never heard of Maxar. It’s a small defense contractor that helps develop systems for NASA and the U.S. military.

When I first discovered Maxar, I had a feeling that we were entering a new space race. Space was about to be an important strategic fighting domain.

At the time, the media laughed at the idea of a new branch of the military. But I felt the new Space Force wasn’t a joke.

In fact, in September 2018, I attended the DARPA (Defense Advanced Research Projects Agency) 60 conference with a colleague. DARPA is the secretive research organization that develops new technologies for the military. Early versions of the internet came out of DARPA.

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While there I heard speakers like SpaceX President Gwynne Shotwell discuss the company’s plans to offer same-day, round trip travel to any destination in the world. The plan is to get 10 launches out of each reusable, $90 million rocket.

I spent three days listening to presentations, asking questions, and meeting the scientists who push the big ideas that turn into tomorrow’s everyday technologies. However, one speaker made the whole trip a success. As I mentioned before, one of the best ways to learn about an industry as an investor is to leave your comfort zone. Usually, that means meeting the experts behind it.

My biggest successes in the markets have all had heavy influence from things I learned asking experts questions and carefully listening to their answers. It’s far more valuable than just looking over financial statements. When I can do both is when I find the best edge.

In this case, I heard one gentleman answer questions on a panel that told me more about how to make money on the new space race than I could have learned reading every book on the subject. At the time, a lot of people laughed when Trump touted his new Space Force. Laugh all you want… it’s going to need trillions of dollars over the years.

That’s when Michael Griffin opened my eyes. Griffin is the Under Secretary of Defense for Research and Engineering. He’s about as highly ranked as a career defense employee can be. He made it clear he works for the country and doesn’t seem to care about the political climate of the day.

Griffin told the small crowd that space will become a war-fighting domain. He said it already is and blamed our rivals for weaponizing it first. Obviously, he’s pointing to the Russians and the Chinese.

Mr. Griffin told the crowd the entire U.S. economy can’t function without control of space. Specifically he said, “You can’t process a point of sale transaction without GPS… you can’t pump gas… nothing functions.”

When it comes to gauging what U.S. spending on a space force might look like, I think a low-ball estimate is in the trillions. The U.S. government derives its power from taxing its $19 trillion economy. If that economy goes off line, its tax revenue goes with it.

Consider that the U.S. has limited space resources at this time. Griffin says, “The U.S. ability to project power in space will match maritime and air dominance.”

That’s where the new Space Force comes into play. It means that today, the government literally needs to create, from scratch, a fighting force equal to the aircraft carriers, destroyers, bombers, fighters, tanks, and submarines it uses to fight on Earth.

Griffin encouraged me to think of the current state of space exploration as about where the Vikings were when they developed longships. That was around the 11th century when the 20 men rowing oars with one wool sail about the size of a bedsheet got a ship moving at around five knots. That was enough to achieve dominance on the seas. That’s where we are in the space race today.

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Which leads me back to Maxar. With the new Space Force officially launched, I knew certain companies stood to benefit. But I didn’t want to just invest in the major defense contractors like Lockheed Martin or Boeing. You can’t get 10-to-1 upside in mega-cap companies.

At the time, Maxar’s main focus was on space radar technologies. If anything, the company would see new contracts come in as the new space race intensified. So I bought shares for about $4.50 at around a $250 million market cap.

What came next shocked almost everyone. Maxar decided to exit its space radar business…because it won a contract to build a moon base.

Under NASA’s new Artemis program, Maxar won two contracts. The first contract is to build the Power and Propulsion Element for the Lunar Gateway that will orbit the moon. It’s intended to support future missions to Mars.

The second contract is to build a robotic arm for assembling spacecraft parts in orbit. The company is also in the running to help build a new lunar lander. I ended up booking a 3x profit eight months after I bought in.

All it took to make that trade was “instinct.” It’s rare to see an obvious multitrillion-dollar investment trend unfolding right in the open with so little coverage. It could be because of the nation’s obsession with Trump bashing. Several people I shared the idea with thought his space force statements were a joke. I did not.

Going to an event like DARPA’s 60th anniversary conference gave me a chance to hear unelected career defense executives casually discuss what’s really going on. It gave me more insight into how to invest so I could pick the companies the government needs to make all of this happen. That’s what led me to Maxar. It’s what will help guide us to more home run bets in the future.

One final thing to remember with home run bets…

Since these are more volatile than the other strategies we’ll be using in Strategic Trader, risk management is extremely important. With these kinds of plays, never bet more money than you can afford to lose. As I said earlier, it only takes a small amount to strike it rich if one of our bets pays off.

SUMMING IT ALL UP We use a decision-making tool before getting in to any trade. It has three categories. If an opportunity doesn’t fit, we let it pass.

The categories are:

1. Strategic Trades How to play: warrants

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2. Unusual Value How to play: cheap, overlooked companies that offer value no one else sees

3. Home Run Bets How to play: buying small companies with massive upside

Each category has its own series of checks that all need to clear before we take a position. If they clear, we move ahead. If a trade clears, we have several ways to play it, as we showed you in our toolbox.

POSITION-SIZING AND RISK MANAGEMENT Within each category, we have specific position-sizing rules. Home run bets are the smallest. These bets have huge potential. That’s why they should never make up more than 1% of your investable assets. While that seems small, consider that a good speculative home run bet should offer you a shot at a 10-to-1 return. If 1% turns into 10%, you created a big increase in your total asset value.

You should NEVER bet more money than you can afford to lose on any of our trades.

We also use buy-up-to prices and limit orders in Strategic Trader. This makes sure we never overpay for one of our positions. Never buy one of our picks if it’s trading above our buy-up-to price. Wait for a dip to enter the trade and always use a limit order.

FREQUENTLY ASKED QUESTIONS Each month, we’ll try to answer your most frequently asked questions.

Just remember we can’t give personal investment advice.

My TD Ameritrade account shows the PRPLW warrants expiring 7/01/2020. You said they expire 02/02/2023. Misprint?

– Thomas

In order to benefit from the recommendations we share with you in Strategic Trader, it’s essential that you read the information we share with you carefully. When we make a recommendation, we will tell you exactly what action to take including the security name, ticker symbol, expiration date, and price to pay.

While our warrant recommendations are accessible through any major online brokerage, it is possible your broker lacks fully detailed data. We’ve seen cases where some brokers have the wrong expiration dates on certain warrants. For instance, TD Ameritrade shows the Purple Innovation warrants expiring in 2020. That’s not the case.

If you look directly at Purple’s most recent filing with the SEC, it states: “The warrants have a five-year term which commenced on March 2, 2018, and will expire on February 2, 2023.”

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Again, this is what you pay us for. Everyone on our research team has a Bloomberg professional terminal. This is the most advanced, and expensive, tool for accessing market data. We also thoroughly research company filings. When we share details on a warrant expiration date or conversion price you can be confident it is accurate.

I am a new subscriber to Strategic Trader and wonder about the advantages/disadvantages of trading over the Canadian exchange versus the U.S. exchange.

I noted they would be monitoring over the Canadian exchange, but I didn’t see a reason why. Thank you in advance.

– Susan

It’s a great question, Susan. When we recommend a stock trading in a different country, we will typically use its home market listing to track the stock. Most of the time a stock’s home market is where most of its volume takes place. That means it is the most useful and accurate way to track a stock’s price action.

However, U.S. investors can buy usually buy Canadian listed shares on the Pink Sheets. These shares represent the same ownership position as shares bought on the Canadian exchange. The only difference is the price paid will be in U.S. dollars not Canadian loonies. Since the dollar is currently stronger than the loonie, the U.S. listing will reflect the difference in the value of the two currencies.

If we were to track both the Canadian and the U.S. listings, we would merely be showing the same stock quote in two different currencies.

In this case and most future cases we’ll use a company’s home market stock listing for tracking.

Unfortunately, my Fidelity platform opened this morning at $3.24 for TDW.WS.B and only allows limit orders. So, I entered a limit order of $2.95 thinking it may pull back and I can get in, maybe, all in one day?

– Gordon

Gordon, you are wise to use a limit order when placing any warrant trade. We calculate our buy-up-to prices for warrants using our proprietary pricing model.

We suggest you stick to our recommendations to avoid unnecessarily paying more for a warrant when patience would allow you to get in at a better price with just a little time.

Take TDW.WS.A, for example. After we recommended these warrants in our special report, they surged past our buy-up-to guidance. One week later, they returned to that level on high volume. Many patient limit orders filled at this level. That means the patience to use a limit order paid off big. Most of the time that’s the case.

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The time it will take to get filled will differ with each recommendation. What will not differ is the benefit of greater returns that comes to investors who exercise patience and get in at a better price.

Where (a website) may I go to find expiration dates and strike prices toward a particular warrant that I would like to take advantage of purchasing? Or, on the same idea, where would I go (website) to ensure the accuracy of strike price and expiration date to that particular warrant?

– Jesse

Thanks for the questions, Jesse. While we use Bloomberg terminals, the most advanced and expensive tool for accessing market data, we also look directly at company filings. Free sites like Yahoo Finance or even your broker may not have accurate information.

The best way to look up the details of a warrant is directly from company filings. This could be a quarterly filing (10-Q) or an annual filing (10-K). Each company is required to disclose the details of its warrants, including the strike price and expiration date. You can access these easily from the company’s investor relations website.

Is it reasonable to expect declining prices at this time, or do I risk another increase in prices if some other organization recommends those warrants during my waiting period or if there is positive news from TDW or TALO?

– Rudi

Thanks, Rudi.

Warrants can be volatile. That’s one reason why you may see wild swings in prices. It’s also a reason why we can’t stress enough that you use limit orders and be patient. If a warrant heads above our buy-up-to price right away, you’ll most likely have a chance to buy the warrants at some point when they pull back. We will always provide you with explicit guidance on every recommendation. If things change, we’ll send out an update. In the meantime, be patient and make sure to use limit orders.

Can you post videos that show of an example on how to go about selling your warrants in your brokerage account? I am not planning to sell my warrants right away but want to know the process of doing it. Thanks.

– Rama

Thanks for the question, Rama.

Selling warrants is just the same as how you sell a stock. All you need to do is enter a sell order with your broker for the number of warrants you want to sell and submit. It’s that easy. (You can view our Training Video 1 as a refresher.) Keep in mind, though, just like we recommend using limit orders to buy, you should always use a limit order when selling.

https://members.caseyresearch.com/strategic-trader/training-videos/

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Please tell me when you bought your warrants and at what price? Did you buy them at a much lower price than I did? I know this is a longer-term trade, but I’m wondering how my experience is so much worse than yours. I am a newbie and need to have a better understanding why my experience is so much different than yours. Please help me interpret the differences.

– Richard

Thanks, Richard.

When we recommend warrants, we record the price of the warrant on the date the recommendation goes out. We do this to keep one price across each recommendation for tracking purposes. However, we realize that every subscriber may have a different entry price based on when they make a trade.

When we issue guidance on a new warrant, we suggest you place your limit order near the market. Our buy-up-to guidance might be double where the warrant currently trades. That means we suggest it’s still a good buy until it breaches that price. A warrant can be up 100% and still be in buy range. Each week we assess this buy-up-to price and update you as needed.

Remember, we’re not looking for small gains from warrants. These are explosive securities that can earn multiples on your speculative position. That’s why patience when entering limit orders to buy warrants produces rewards down the road.

My question is whether the warrants upon exercise exchange on a one-for-one basis in conversion to shares; or are they more similar to options and exchange at some multiple of shares?

– Mervyn

Thanks, Mervyn. This is a good question.

As for exercising, we will rarely exercise the warrants we hold. Most often, we will recommend selling them back into the market at a time that seems optimal. That tends to be an easier way to capture the value of a warrant.

With respect to conversion rates, we will always share these with you in our warrant fact table in the newsletter when we make a recommendation.

Warrants most frequently are one-to-one, meaning one warrant gives the right to buy one share of stock. When that’s not the case, you’ll see half warrants… meaning it takes two warrants to buy one share of stock.

That was the case with Inspired Entertainment’s warrants. Warrant holders can buy one share of stock for every two warrants held. The same is true for Purple Innovation warrants.

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My question regarding warrants: If the stock I have a warrant on actually gets to a place I want to purchase the stock, how do you actually exercise that action? Do you call the company or your broker to sell the warrants? How is the purchase executed?

– Joe

Thanks for the question, Joe. It’s actually very simple for you to exercise your warrants and purchase the stock. All you need to do is call your broker and tell them you want to exercise your warrants.

Keep in mind you would be on the hook for the cost of the trade. That means for every warrant you exercise, you would pay the per-share strike price. So if the strike price is $10, you would pay $10 per share.

What you do with your warrants is up to you. However, we find the best way to capture the value of appreciated warrants is to sell them back into the open market. As long as the value matches what we deem fair, this is what we will suggest.

Regards,

John Pangere, CFA Senior Analyst, Strategic Trader

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