The Worth of a Warrant (4)

Warrant (4)


Should the situation be reversed, whereby the price of the underlying instrument or share as in the example above,

falls below $2, you might decide not to exercise your rights to subscribe to the share at $2.

It is no longer attractive as you can buy it from the market at a lower price.

(Please note that the above is just an example to illustrate the point and should not be taken as investment advice to buy or sell warrants).

Remember that the warrant becomes worthless after the exercise period has expired.