What does this mean in a long run? Is DWAC basically a stock, while DWACW is just a contract that lets you buy a stock post merger at $11.50, but you don't actually own any stock yet? So let's say I buy DWACW. If price goes up on the stock, I can buy a stock at 11.50 and my gain is: CURRENT_STOCK_PRICE - $11.50 - WHAT_I_PAID_FOR_WARRANT?
So trying to understand this better. Let's say stock is at 100 post merger and DWACW was bought for 30. profit = 100 - 30 - 11.50 = $58.50 (provided I exercise the buy option) But if stock drops below the price of DWACW + 11.50 ... it's negative value.
Hence warrant is only worth it for long term hold and only as long as it's PRICE + 11.50 is way under the stock price. Is this the right way of looking at it?
DWAC is a share of the SPAC which will merge with the private company. Prior to the merger vote, DWAC shares will be redeemable for $10.
DWACW is a warrant. These warrants are contracts which grant the bearer the right to buy a share of DWAC at a price of $11.50 at some future point, after the merger, and more specifically, after the post-merger company issues a secondary offering. This usually happens around a month or so after the merger, but the timing can vary.
Which one should I buy? That depends upon how you are trading.
DWACW currently trades at a substantial discount to DWAC. After the secondary offering, DWACW will be worth at least whatever DWAC is trading for minus $11.50. The reason for the discount is that the price could fall after the secondary offering, and this commonly happens with SPACs. This means that DWACW is better for a long term hold.
Conversely, DWAC will likely continue to trade at a higher price than DWACW plus $11.50 until the offering occurs, and may also be more volatile. This means that DWAC may be more appropriate for swing trading.
This is not investment advice. I personally am not planning to necessarily hold DWACW long term.
Just be aware of what you are buying and why.
TLDR:
If you are swing trading, feel free to trade DWAC. If you are planning to hold long term, it makes no sense to hold DWAC because you are paying extra premium. In that case you should buy DWACW instead.
invite response
https://www.reddit.com/r/DWAC_Stock/comments/qcylhg/dwac_vs_dwacw_vs_dwacu/
Here is the SEC filing:
https://www.sec.gov/Archives/edgar/data/1849635/000110465921128231/tm2130724d1_8k.htm
What does this mean in a long run? Is DWAC basically a stock, while DWACW is just a contract that lets you buy a stock post merger at $11.50, but you don't actually own any stock yet? So let's say I buy DWACW. If price goes up on the stock, I can buy a stock at 11.50 and my gain is:
CURRENT_STOCK_PRICE - $11.50 - WHAT_I_PAID_FOR_WARRANT?
So trying to understand this better. Let's say stock is at 100 post merger and DWACW was bought for 30.
profit = 100 - 30 - 11.50 = $58.50 (provided I exercise the buy option)
But if stock drops below the price of DWACW + 11.50 ... it's negative value.
Hence warrant is only worth it for long term hold and only as long as it's PRICE + 11.50 is way under the stock price.
Is this the right way of looking at it?
DWAC is a share of the SPAC which will merge with the private company. Prior to the merger vote, DWAC shares will be redeemable for $10.
DWACW is a warrant. These warrants are contracts which grant the bearer the right to buy a share of DWAC at a price of $11.50 at some future point, after the merger, and more specifically, after the post-merger company issues a secondary offering. This usually happens around a month or so after the merger, but the timing can vary.
Which one should I buy?
That depends upon how you are trading.
DWACW currently trades at a substantial discount to DWAC. After the secondary offering, DWACW will be worth at least whatever DWAC is trading for minus $11.50. The reason for the discount is that the price could fall after the secondary offering, and this commonly happens with SPACs. This means that DWACW is better for a long term hold.
Conversely, DWAC will likely continue to trade at a higher price than DWACW plus $11.50 until the offering occurs, and may also be more volatile. This means that DWAC may be more appropriate for swing trading.
This is not investment advice. I personally am not planning to necessarily hold DWACW long term.
Just be aware of what you are buying and why.
TLDR:
If you are swing trading, feel free to trade DWAC. If you are planning to hold long term, it makes no sense to hold DWAC because you are paying extra premium. In that case you should buy DWACW instead.