The $28,800 was spent at conversion point, when the price was at $15 per share. Initial outlay was $10,000 for both cases. The net profit in both cases considers total consideration ($10,000 for long shares vs. $38,800 for warrants) Profit calculated in both cases was based on total net cash flow, and so the exercise option price was already factored in for total profit calculation. This exercise is just to compare two investments of $10,000, since the $28,800 is not paid until February 2016, or could even be netted out by the broker at conversion with no additional net cash out at that point. We are comparing two investment strategies with two similar but different vehicles. Conversely, you could do the same calculation with just the sale of the warrants in February 2016 with no actual conversion of the warrant, and theoretically, you would have the same net result with no additional cash thrown in (broker netted to you), if the warrant market has kept up with the PPS. If it has not, then you are best served to exercise the warrant. Bottom line; I get to keep the $28,800 until February 2016, and minimize my downside if the stock goes to zero. I understand what you are saying, but I'd rather keep my powder dry until more is known, and a hell of a lot should be known by February 2016!
