E Only 2 Pot Stock Warrants Warrant Your Consideration

TM Editors Note: This article discusses penny stocks and/or microcap companies. Such investments are readily manipulated; do your own careful due diligence.

This article describes how warrants work, the advantages of owning those warrants with the right metrics and the 2 marijuana companies with warrants that have those metrics.

What are Warrants?

A warrant is a security giving the holder the right, but not the obligation, to acquire the underlying security at a predetermined (i.e. exercise) price and for a specified period of time (i.e. term or duration).

Why Bother Investing in Warrants

Warrants are priced 70% to 75% less, on average, than their associated stocks and, therefore, you are in an ideal position to leverage your dollars very effectively, i.e. it gives you the opportunity to earn more dollars (in percentage terms) with considerably fewer dollars at risk.

How to Buy (or Sell) Warrants

Warrants often have very thin markets (i.e. demand) and, as such, usually have a big spread between the bid (the price at which you are willing to make a purchase) and ask (the price at which you are willing to sell) price. As such, it is imperative that you place only “limit orders” when buying or selling warrants if you want to be in control of the buying or selling price in such a transaction as compared to "market orders" which are more concerned about the speed of the execution as opposed to the price..

  • A limit order has a set price and may only be executed at the set price but, that being the case, it may never get executed because the market may move away from the set price. Those who use limit orders risk not having an order executed.
  • A market order does not have a set price and is therefore executed immediately at the current ‘market’ price.

When to Exercise Warrants

The Exercise Price

It is important to note that if your warrants are “in the money”, i.e. the common stock is trading above the exercise price of the warrants, and the warrants are approaching the expiration date, you must take some action. Expressed differently,

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