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2 comments:
if you were to take a position in aaac would you recommend the stock or the warrants
It depends. Stock is safer, since there is always a risk that the merger may not happen (although highly unlikely in this case) and warrants may become worthless. If/when the merger goes through, warrants will trail the stock by $5 (since $5 is the strike price). Warrants may also be called for redemption after stock trades for 20 consecutive days above $10.
The big advantage in warrants is you can obviously buy more of it with the same amount of capital that you are planning to invest.
To sum everything up - it's risk vs reward kind of thing :), where I prefer warrants - willing to take my chances.
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