Ayala Pharmaceuticals Inc (ADXS)

[ignatiusrielly35]

I understand how warrants work, Obi. You seem to be confused in that you ignore the leverage warrants provide. Obviously one would not buy warrants if you know you are going to exercise them, because if so there is no reason to pay the premium. However, if you believe the stock will be much higher before expiration, and you're right, you will make alot more money with warrants. The ability to exercise is there, but it is not necessarily the primary objective. The same logic of buying call options. The warrant premium is a reflection of supply and demand. Many shorts short the stock and buy the warrants as a typical strategy. Except they can't really get their hands on any in this case. And the mm's have very few in inventory, and need them also. So if you think the premium is high (which it really is not), then the likely reason is that the mm's don't have many to sell (low supply).