Spread To Swap GameStop Warrants To Options
Summarize this article with:
Safety In Value6.66K FollowersFollow5ShareSavePlay(5min)CommentsSummaryGameStop (GME) warrants (GME.WS) trade at a premium to comparable call options, creating a notable pricing inefficiency.Both GME.WS warrants and long-dated GME call options offer nearly identical economic exposure, but options are currently cheaper.Retail holders of GME.WS can swap warrants for call options to maintain or increase exposure at a lower cost.This arbitrage exists due to high warrant borrow costs and unique demand from GME short sellers, favoring existing retail holders. jetcityimage/iStock Editorial via Getty Images GameStop (GME) has been arguably the biggest meme stock ever and has devoted fans and high-conviction shorts. As part of the company's ongoing plans to reward shareholders (and coincidentally punish those shorts), they issued warrants (GME.WSThis article was written bySafety In Value6.66K FollowersFollowSafety In Value is a microcap specialist providing research on underfollowed small cap value stocks and analysis for actionable special situations. He looks for companies with a margin of safety to their value, and avoids downside risk. He believes strongly in the first rule of investing - "Do not lose money."Analyst’s Disclosure:I/we have a beneficial long position in the shares of GME either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Long GME call options, short GME.WS warrantsSeeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You