Nikola Corporation (NKLA)

[SmileyRiley_595]

There is a cash exercise and cashless exercise option. The cashless exercise was described in my original post...

The cash exercise is available 30 days after the stock begins trading under NKLA. If you choose to exercise your warrants, you have the right to convert warrants to stock for the strike price of $11.50. Your total cost of the underlying stock will be price you paid for the warrant + strike price.

Example:
Purchase 1,000 warrants for $5.00 and you decided or, Nikola decides to claim the warrants for cash. You have 3 choices...
1) do nothing and let the warrant be called worthless
2) sell the warrant in the market
3) release your warrants, pay $11.50 and receive an equivalent # of shares of common stock

The outcome of those 3 choices are as follows:
1) total loss of $5,000 (1,000 warrants x $5.00 purchase price)
2) profit/loss would be determined by subtracting sell price from buy price
3) total cost of underlying stock would be $16,500 = (1,000 warrants x $5.00) + (1,000 stock conversion x $11.50)

If Nikola does not choose to force a warrant conversion... Under normal circumstances, no one would allow purchased warrants to go unexercised without selling in the open market or converting to common stock. But, if nothing is done by the owner, the warrants would expire worthless and the owner would lose the initial investment ($5,000 in the above example)