Vpc Specialty Lending In... Share Discussion Threads

[chucko1] 18/2/2021 15:18

21.50 VIH now.

[chucko1] 16/2/2021 17:29

Far from it, but we need this madness to prevail. We're still OK if it doesn't, so it's more like sport than investment. Buy a share of VSL, get a decent dividend and a free ticket to the steeplechase.

[spectoacc] 16/2/2021 17:18

And judging by VIH's price, they're right. No sign of the crypto bubble bursting yet.

[redhill9] 16/2/2021 17:17

VPC back to buying their own shares again over the past two days. Clearly they must believe the current share price is still a bargain.......

[chucko1] 11/2/2021 12:57

Usually early March ex-date.

[spectoacc] 11/2/2021 09:16

Divi this month? Guessing a week or two until we find out ex date.

[chucko1] 10/2/2021 13:55

I agree - back to boring! I am not sure how well income accrual is served by call spreads/knock-outs with rebates on SPACs. You couldn't really make it up. I did make a little bit of money on them, but let's see if that's still the case at 9.30EDT.

[mach100] 10/2/2021 13:34

Thanks Chucko. Sure is complex and yes I probably took the Private Warrants from the prospectus. With the cap it looks like it is better to stick with Vpc shares than go stateside. Appreciate the explanation above which chimes in with my understanding.

[chucko1] 10/2/2021 13:13

I have described the "Public" warrants, whereas Mach100 is referring to the "Private" cousins.

[chucko1] 10/2/2021 13:11

Oh dear!! On reading the terms of the warrants in full, there are anti-dilution measures that effectively cap the payout at $6.50 (being $18.00 minus the strike). There is both complex logic and legalese to wade through. This warrant is either, at best, a call spread ($11.50 vs. $18.00), or at worst, a knock-out call, knocking out at $18.00 with a $0.10 rebate. Now we can say that the vastly increased trading activity on the warrants the past few days has been by professional market traders who have had sight of the full terms. Even the Bloomberg description is not aware of the full terms, merely describing this as a 1:1 warrant on VIH and not pricing it in the more complex manner described above. The rationale appears to be that if the Class A shares increase beyond $18.00, they want to kill the warrants but allow warrant holders to exercise - and there is some convoluted language that appears to state that the Class A shares "may fall below $18.00". I take this to mean that they cannot effectively be exercised at any price above $18.00. I can say that I have never seen an option quite like this (from the legal/corporate perspective), but this is an option on something SPAC-like where, I suppose, anything goes.

[mach100] 10/2/2021 11:46

Does this mean they can buy them for 10c? Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00 Once the warrants become exercisable, we may redeem the outstanding warrants: (except as described herein with respect to the private placement warrants): ∎ in whole and not in part; ∎ at a price of $0.10 per warrant

[chucko1] 10/2/2021 09:59

Thanks for the link. The VIHAW warrants have been detached from the units and I therefore presume the same restrictions apply. Yes, I see. The essential aspects of the value argument remain unaltered so the question is what to sell (or how much) versus the warrants. After all, as the theory says, you never exercise call options prior to expiry which is 2445 days away! (nor puts with interest rates at near zero, though with negative rates early exercise of calls becomes theoretically possible, albeit still very, very, very unlikely). For now, I would sell very few against the warrants. VSL is still too cheap. The precise amount is barely a science in this case, especially as there is basically no data to refer to even if you thought it could be useful (for volatility, correlation etc). Selling other market drivers such as crypto or Nasdaq is likely too risky, especially crypto.

[epistrophy] 10/2/2021 08:58

Try here for the prospectus Https://www.sec.gov/Archives/edgar/data/1820302/000119312520240106/d10733ds1.htm I'm not sure you have got it right though. It looks like you can't exercise the warrants until November: Exercise period: The warrants will become exercisable on the later of: - 30 days after the completion of our initial business combination, and - 12 months from the closing of this offering;

[chucko1] 09/2/2021 18:04

.... I now am the proud owner. It's amazing what you can get done in 12 minutes.

[chucko1] 09/2/2021 17:52

Epistrophy - indeed. Except in this case, the warrants (separately listed as VIHAW) are American and can be exercised at any time (so you kn ow you can always buy the underlying at $11.50 even if you are short and they go to a zillion - your concern!). Unfortunately, I have not been able to locate a prospectus for them (available from Jeffries) so I cannot say what are the potential confounding details (if any, which I assume there are not). The warrants are currently around $4.50, representing negative $2.11 of intrinsic value. So, at the very least, don't bother with VIH, load up on VIHAW. They have 2446 days to expiry, so there is a truckload of time value (or should be). On the day of issue, they were priced at around $1.00 which implied around 15% volatility (which is stupid cheap even then - volatility the past 60 days or so has been either low at around 12% or over 100% [since the announcement]). Trading in them is thin, clearly attracting retail only. There is an argument to sell a few VSL and buy these warrants, but most of us here simply bought VSL for the income. No? It's bloody tempting to take a flier here. In fact ....

[spectoacc] 09/2/2021 08:28

$20 after hours, VSL should be higher IMO.

[chucko1] 08/2/2021 19:39

Well, not in theory as you could arbitrage warrants against listed options. Illiquid ones might exhibit peculiar behaviour (if they were not hedgeable), but otherwise ... The value of an option is the intrinsicness of the option (how much the forward of the commodity is in the money) discounted back at (generally) the risk free rate. On top of that, there is the time value of the option, which is a function of how far the forward is away from the strike. If it is out of the money, all you have is time value. If you are in the money by an equal and opposite amount, the time value is pretty well the same. Why? Who cares if you are in or out of the money - you hedge the thing with the forward and so you are then indifferent. Time value is principally a function of the product of the volatility and the square root of time and "how near the strike" the option is, whether in or out of the money. In the case of VIH/VIHAU, assuming there is no hedge you can do (cannot short the stock or equivalent financial contract), yes, you might think the price is nuts and avoid. If there is a hedge, the above theory is important.

[gco1133a] 08/2/2021 18:44

Warrants normally trade at discount to the intrinsic value when they are in the money because there is a risk they will be valueless by the time they can be exercised. The discount will be larger if the underlying stock is very volatile and will be smaller if the warrant is very much in the money (imagine a stock price of 500 and warrant strike price of 1 for example)

[chucko1] 08/2/2021 17:57

That is quite interesting. If it is half a warrant, where the warrant is struck at $11.50 and the difference between VIH and VIHAU is $2.20 (it is at the time of writing), then this implies the price of each warrant to be $4.40. Strange, given that the price of each warrant must be at least the intrinsic value (so $7.70), which implies the VIHAU is at least $1.65 cheap and bear in mind I have not included any time value (which I suspect is not small in this instance). Possibly not easy to arbitrage as this supposes that you need to find a borrow of VIH or some other manner, which I suspect does not exist on this stock at present. But buy VIHAU for choice if you want to take a flier and believe Bitcoin and Tesla is the future. Strange choice to be made by income seekers!!!!!

[redhill9] 08/2/2021 17:39

Thanks for clarification.

[gco1133a] 08/2/2021 16:28

VIHAU is one ordinary share with 1/2 a warrant attached

[chucko1] 08/2/2021 16:06

VIH is $19.23 right now, and is the underlying stock. VIHAU appear to be units consisting of one share and one other thing - no clue what that other thing is yet. I will look further. They are 1:1 with the stock, but trade in much smaller daily volumes.

[oniabsta] 08/2/2021 15:56

VIH available on this site. Just add to your monitor. Currently $19.2

[redhill9] 08/2/2021 15:51

Yes, appear to be the same. Slight time difference in price quoted which may explain variation? Edit: Yes, I see the difference in epic now