How to calculate the exercise price of US stocks that will issue warrants soon?

Take the warrants as an example. If the warrant price is 1 yuan and the exercise price is 6 yuan, and if the stock price on the exercise date is 10 yuan, investors can use 7 yuan (warrant price+exercise price) to buy stocks with the market value of 10 yuan, and get the profit of 3 yuan (regardless of transaction cost).

American options (warrants) can be exercised on any day during the exercise period, while European options (warrants) can only be exercised on the agreed exercise date. Whether investors finally decide to exercise depends on the fluctuation of stock price and warrant price. For example, if the stock price falls to 5 yuan on the exercise date, investors will give up the exercise, otherwise 2 yuan will lose money.

Extended data:

Exercise precautions:

1. There is a time limit for exercising rights, that is, exercising rights within the prescribed time limit (exercise period), neither before nor after the exercise period. It is particularly important to note that the exercise operation is overdue, and the warrants that have not been exercised after the expiration will be cancelled, and the warrants will be worthless by then.

Two, during the exercise period, the holder has the right to exercise the right to buy or sell shares, but whether to exercise this right depends on the proceeds of the exercise. It is profitable for investors to choose to exercise their rights. The higher the stock price rises, the greater the return.

3. At present, the warrants in the warrant market are all settled by securities and cannot be exercised automatically. Warrant holders must take the initiative to declare the exercise on the exercise day, and the shares obtained by subscribing for the exercise of warrants can only be operated on the next trading day after the exercise. Therefore, the actual exercise income is also affected by the stock price fluctuation after exercise.