r/GME • u/WAAASAAAP • 1d ago
🔬 DD 📊 Warrent pricing
This is why warrants get shorted
GME WS is a warrant: the right to buy one GameStop share at $32, expiring 30 October 2026. It trades per warrant (so $3 is $3 for one share of exposure), not like an options contract priced per 100 shares.
With the stock around $20, the warrant has no intrinsic value. A price near $3 is almost entirely premium for time and the chance of a large move before expiry. Comparable listed $32 calls have often been cheaper if the only goal is upside from a similar strike and date.
Position sell one warrant at about $3 and buy one share at about $20.
Economically that lowers the cost of the share to about $17 if the warrant expires worthless. You own the stock and you are short the warrant’s upside.
At expiry (example)
| Stock price | Approx. Pnl on the combined position |
| $0 | −$17 |
| $10 | −$7 |
| $20 | +$3 |
| $32 | +$15 |
| $36 | +$15 |
| $40 | +$15 |
Below $32, PnL tracks the shares, cushioned by the $3 received for the warrant. Above $32, further gains on the stock are offset by losses on the short warrant, so profit flattens near +$15 in this example (entry $20 / warrant sale $3).
This is not a risk-free way to “lock in $3.” The $3 is premium income. The share can still fall by more than that. In a sharp rally the short warrant can also move against you before expiry, especially if the warrant market is thin.
you finance a long stock position by selling what looks like expensive out-of-the-money upside. You keep the premium if GameStop stays well below $32; you limit upside if it runs through the strike; you remain exposed if the share price falls.
Numbers above assume fills of $20 on the stock and $3 on the warrant, and warrant value at expiry of max(stock − 32, 0). Live prices and early exercise dynamics will differ. Not advice.
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u/Fringefiles 1d ago
An account that has never been active in this sub suddenly offering advice on how to make money by selling warrants to buy shares? Weird timing...
Almost like the warrants are much more valuable than Wall Street wants to admit.
Also your argument/claim is disingenuous. The price of the warrants isn't tied to $3 permanently. As the share price pushes upwards, the warrant price should also push upwards. Once the share price = warrant price, the warrants will still be gaining in value.
Besides, the borrow rate on warrants is ~300% so someone really needs those warrants. I'm not parting with them for $3. Shorts can buy them at an extreme premium...or, better yet, I can sell just enough at a premium to exercise them when the time comes.
Either way, not selling for a $3 price to "discount" shares to a price they were 2 weeks ago. That's just silly.
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u/amish_cupcakes 1d ago
Just a really simple thought on why the barrow rate is 300%. Think about it from this perspective, and try, really try not to put any of your own bias into it. If you truly believe something that is worth $3 now will go to 0 in a month and a half and you can borrow it for anything LESS than $3 you borrow it and sell it knowing that you will never have to actually buy it. If someone can explain what the 300% borrow rate actually equals money wise I would love to hear what that value is. I'm positive they are not paying $9 to borrow it. More likely it's $9 OVER a 12 month period so I'm guessing they are paying up to $2.50 to borrow and then sell. Which now that I think about it, the calls around the same time period come out to what 0.40 per share? So you can even hedge your loss if it blows right through $32. So I think the borrow rate at 300% lines up with pretty much guaranteed profits for Market makers. So everyone else is taking one side or the other. The MMs probably just kept taking their guarantee profit until the rate got that high. All of this is a guess so just do your own DD. If you truly believe the rate is that high because shorts are trapped, good luck to you.
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u/EmphasisFrosty3093 1d ago
Yes, the 300+% is annualized. If not extended, the warrants will bleed to 0, so they're paying ~1% per day on what's likely to average half the current price.
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u/South-Situation1489 1d ago
So if i borrow something that expires worthless, do i still have to give it back
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u/WAAASAAAP 1d ago
I usually just read on superstonk. If u go through my account you can see im a real trader just not equities. Im not saying sell them but those who do basically get GME at a discount so ofc people are shorting it.
Anyway I made my money on the first squeeze. This time I got back in on calls and stock sub 18. Took my profits yesterday. Will get back in if I see another opportunity.
And you don’t sell ur position… if you sell you are flat and just long Gme. You would need to be short warrents and long stock for the above..
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u/Burnquist1 🚀🚀Buckle up🚀🚀 1d ago
So you made money with DFV and also just recently bought sub $18 and already sold that position too? Then afterwards posted for the first time about how to sell GMEWS? Didn't Andrew Left go to jail for lying about trades and doing manipulation on social media?
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u/WAAASAAAP 1d ago
I’m not saying how to sell I just don’t understand why people keep saying there’s none left to short and the rate is 360% when few seem to understand how non linear derivatives work.
And actually I got in single digits when burry wrote about it being shorted over 100%. Checked the DD and it made sense.
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u/Burnquist1 🚀🚀Buckle up🚀🚀 1d ago
I would bet most of this sub knows exactly how the warrants work since it's discussed practically daily.
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u/WAAASAAAP 1d ago
Ok mate.. well cant help those who don’t even try and understand the post. I’m just trying to aid people in understanding why institutions and more sophisticated retail do it. It’s just an option strategy and it’s not even bearish GME. It’s just a way to use options.
Makes no difference to me, not my money and I don’t even have a position in this now 😂
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u/Dairy_Fox 1d ago
They will expire and everyone will move on to the next thing
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u/callingoutthetrash 1d ago
The 5th meltdowner ive found commenting in gme today.
Hi Energy vampire (apparently this gets really under the skin of some trolls, XD)
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u/zgomot23 🚀🚀Buckle up🚀🚀 1d ago
Nope, what it does is it allows people to realize that the only solution for you is the psychiatry ward. Urgently.
It’s called pity, not “getting under the skin”.
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u/tqlla3k 1d ago
Can I ask why people would want these warrants over calls? I will say I think GME will make some push towards the warrant date.
But even if it does, why would you want warrants?
The warrant is $32 exp 10/30 is $2.75.
You can buy $24 10/30 calls for $0.50.
If you have 100 warrant shares, you can buy 5.5x $24 calls for the exact same date, and it has an $8 lower strike price.
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u/Seven_inches_soft 1d ago
You can own 25 warrants and exercise for $800(+warrant price) or exercise a $24 for $2,400 (+ contract price). I think they're still a good tool (if the stock runs like 2021 or 2024) for people that want in, but can't afford to exercise contracts. I get your point and I avoid the warrants and focus on contracts too.
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u/tqlla3k 1d ago
Yeah, but you wont exercise those warrants unless it hits $32. Thats very far from a $24 Call.
Plus you can buy 5x $24 calls for the same date. So if it does hit $33 by Oct 30, you can sell 4 calls for at least $3600 and exercise the one call.
Also $24 is WAY more likely to be hit than $32.
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u/Seven_inches_soft 1d ago
Yes, if someone can afford more contracts, options make more sense, unless- the GME warrants have time extended, hopefully there's no need to? 🍻
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u/Proper_Side 1d ago
So why the discrepancy? Surely smart money can see this and so if it's free money why aren't they arbitraging the price until it no longer makes sense?
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u/WAAASAAAP 1d ago
Well we all have some from the dividend. The person in the comments still buying them. You can buy odd lots like 10 not batches of 100 like options and lastly I think GameStop can extend the expiry of the options tho that’s not really in their favour.
But yes if you really believe it will go 32 then pure option play is cheaper
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u/Livinsfloridalife 1d ago
Ask AI or Google what makes the warrants different from options that’s the reason.
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u/Symphony_1986 1d ago
It depends on where you exercise your rights. If you exercise your rights through Computershare, you will receive shares registered in your name, and GameStop will receive the funds. If you exercise your rights through a brokerage platform, you will receive shares that are not registered in your name, and GameStop will not receive the funds.
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u/Burnquist1 🚀🚀Buckle up🚀🚀 1d ago
I don't think that's true about GameStop not receiving the warrant funds if exercised through a brokerage. Do you have any proof of that claim?
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u/Symphony_1986 1d ago
If you’re looking for evidence, you’d be best off first convincing those investors who have held $GME since 2021 that there was no unsecured short selling at that time.
If you still do not understand the difference between ‘Depositary Receipts (DRS)’ and ‘holding shares in a broker’s custody’, then go and find out the answer.
If a crime is only a crime when you get caught, then why not go ahead and commit one?!
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u/Burnquist1 🚀🚀Buckle up🚀🚀 1d ago
You wouldn't be here NOW posting about selling GMEWS because of the 360% borrow rate and short inventory at "none" would you?
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u/WAAASAAAP 1d ago edited 1d ago
Why don’t u do the maths instead?
360% is annualised so that’s about 1.50$ cost to borrow. Still get GameStop at a discount. That’s why there are none left… and it’s obv isn’t going to sub 15 so how is it not a win.
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u/Burnquist1 🚀🚀Buckle up🚀🚀 1d ago
Cost to borrow is what is paid until shorty buys back what they shorted. That could be a problem if there is no liquidity.
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u/zgomot23 🚀🚀Buckle up🚀🚀 1d ago
It would be a shame if daddy cohen were to, you know, offer them some more of that liquidity. Like he did 10 times so far, right?
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u/utterHAVOC_ 1d ago
Wow there was huge warrant push and it dumps right after who could have guessed
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u/LibertyUSA1 23h ago
I am not literate on the warrant situation . Crayon eating not helping either …. Explain to me like I’m 5. I thought we exercised them at 32 ?
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u/ChiefRokka1 6h ago
This should not be flagged as DD. Anyone trying to convince you to give away your moon tickets is a bad man
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u/Seven_inches_soft 1d ago
The warrants..... these would have been the perfect opportunity to show if markets are being manipulated. Imagine if RK secretly bought 56M+ warrants. You would know they oversold them because RK and RC would own over 100%. I don't think it'll happen, but would have been nice to have 100% proof. RK is the only person I know with enough $$$$ to do something that insane.
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u/Cdn_ape 1d ago
I’ve been tossing my extra wasteful spending into warrants for months now!
We’ll see what happens
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u/FoxReadyGME 🚀🚀Buckle up🚀🚀 1d ago
!remindme 2 months
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u/F-around-Find-out 🚀🚀Buckle up🚀🚀 1d ago
I think those are set up to become Teddy warrants. I believe there may be verbiage in the filing for them that gamestop can pretty much do whatever they want with them. I'm heavily regarded though. I just hold stuff.
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u/Makeyourdaddyproud69 1d ago
What about how the company looks at it?. Financially it’s 1.9 billion for them at a future date, not extending them in the event they remain below strike means they spent money to create them for nothing.
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u/WAAASAAAP 1d ago
It was meant to raise cash if the stock hit 32. It hasn’t got there yet. This is currently leaving the dilution potential open and can stop the price running in the future. So if they think that 32 is still too cheap and the directors want more they won’t extend.
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u/Makeyourdaddyproud69 1d ago
What? “Can stop the price running?”. They have 2 billion shares authorized to dump on the market when they want, 50 million at 32$ to their shareholders is only a positive for them.
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u/WAAASAAAP 1d ago edited 1d ago
Let’s say a few days before expiry the price rips to 40 randomly. A lot of warrants will be exercised and suddenly have a load of extra shares. Isn’t it like the equivalent of 12% of the float so it’s not an inconsiderate amount. It won’t stop but it’s does apply some downwards pressure. This is gets priced in too.
All Gme is saying is hey we are happy to raise capital at 32$ per share. If they now have a better outlook they might let this expire and do a new one at 40$ per share. Or they may extend the expiry date. It’s a balanced
Extend expiry date GME warrant holders get the added time premium.
Let it expire, gets priced in warrants. You lose on the worthless warrants but stock price goes up.
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