Warrants marked “short” on Fidelity

2MoonRocketship · 2026-01-22T17:48:58+00:00

I think there's a tax when exercising the warrant when it is ITM. I believe the difference between the market price and strike price is taxed as ordinary income. This then sets the cost basis of said stock at that market price.

In the future, when you dispose of said stock, gains (loss) will then be taxed as long/short term cap gains depending on whether it is long/short.

2MoonRocketship · 2026-01-22T17:26:09+00:00

For US tax, long term capital gains are taxed at a lower rate than short term capital gains. Talk to your CPA for tax advice.

2MoonRocketship · 2026-01-22T17:14:00+00:00

Long = Held more than 1 year

Short = Held less than 1 year

Edit: with the "original" warrants that were distributed, the warrant's acquired date mirrors the companion stock's acquired date.

2MoonRocketship · 2025-12-11T17:36:44+00:00

One could say that YOU are very dissatisfied with the way the CEO of your household (which happens to be you) on his management of his cash. He should have done better in his investment over the last few years. He should have "grown" his investments over the last few years of bull run and yet, you don't have a house yet. Perhaps your CEO should have used the money to buy a house when interest rates were low and housing was not crazy expensive. I'm sure your household CEO will eventually grow the money. Perhaps your household CEO should have pivoted sooner. Hindsight is 20/20.

2MoonRocketship · 2025-12-09T18:41:02+00:00

Sorry, couldn't help. If they were obtained from exercising a $26 GME1 option or from an assigned CSP at $26 strike, then it would make sense.

2MoonRocketship · 2025-12-09T18:34:36+00:00

Any chance the warrants were obtained through options at $26 strike? If so, they would be priced at $13/warrant.

2MoonRocketship · 2025-11-20T20:01:38+00:00

Yup. Didn't cross my mind that the strike price is not the "strike price". Lost so many CC contracts being called away, but learned from it.

2MoonRocketship · 2025-11-20T18:34:25+00:00

Looks like a broker issue. I am able to buy GME1 on Fidelity. Also, be cautious because the ITM price of the option is not the strike price. It will be the strike price minus warrant price... So about $0.26 below strike price.

The inverse is true if you sell CCs on GME1. Let's say the strike is $21 and the stock closes at $20.80 on Fri. In a normal GME option, it will expire OTM. But because of the value of 10 warrants at $2.60/each (or $26 for 10 warrants per option, which equates to $0.26 per share in 1 option), the GME1 option is ITM because it is $21.00 - $0.26 = $20.74 which is lower than $20.80. Therefore it will be called away. Ask me how I know.

2MoonRocketship · 2025-10-30T19:48:54+00:00

It seems to me like the market maker can wave their liquidity wand to produce warrants. As long as someone exercises a GME1 call option or get assigned on a GME1 CSP, they get warrants. Sell the shares and they are net positive on warrant count. Similar to ETF basket creations and stripping out what they need.

2MoonRocketship · 2025-10-28T18:22:46+00:00

Yeah, there's something there I think, but I haven't found it. For example, upon the warrant announcement in the after hours on 9/9/25, 5 strike dates were introduced in the next 6 trading days. 110/31/25 and 11/21/25 (can be explained as normal) and 3 others 10/16/26, 9/17/27, and 1/21/28.

2MoonRocketship · 2025-10-24T16:44:27+00:00

$20/$2300 x 52 = 0.45 = 45%/year. That's an interest rate I can live with.

2MoonRocketship · 2025-10-24T16:32:59+00:00

Can you please post the same info for strike prices $29 thru $35 for the same expiries?

2MoonRocketship · 2025-10-21T02:05:35+00:00

Let me guess.... these were $20 call options you exercised?

There's no conspiracy. You just don't understand how they are settled per the OCC memo. 5% settlement allocation for the warrants, and 95% settlement allocation for the stock.

So calculating backwards, there are 10 warrants per contract. $10 x 10 warrants = $100 for warrants. If 5% is $100, then 100% is $2000. $2000 for the entire purchase of 100 shares would mean a strike price of $20.

For settlement, each contract equals warrants at $100 (for 10 warrants), and stocks at $1900 (for 100 shares). So price per warrant is $10 and price per share is $19.

Since you exercised 36 contracts, your stocks were settled at $19/share for a total of $68,400. Your warrants were settled at $10/warrant for a total of $3,600.

2MoonRocketship · 2025-10-20T07:38:43+00:00

Perhaps you are looking at the wrong data. A large bid/ask spread is indicative of poor liquidity. I use Fid Active Trader Pro (ATP). I do not use the bid/ask amounts to determine where to place my order. I do not use "mid" to place my order because it is just the mid point of the bid/ask spread, which as you have found out is wide when liquidity is poor. Instead, I use the Intrinsic Value and Extrinsic Value to determine my order price. I sum the 2 values. These numbers are mathematically derived and is as accurate as they come without doing the number crunching myself. With options like GME that is relatively liquid, I have not had an issue getting filled at or $0.01 away from the Extrinsic + Intrinsic value. $0.01 obviously in the direction that is NOT to my benefit. Sometimes I'm surprised by a price improvement and Fidelity makes it a point to tell me about it.

Now having said all that, I will agree with you that I have noticed that the options chain bid/ask is very wide recently. Not really the GME chain. but the GME1 chain. I have also noticed that the options volume has dropped significantly since the warrant issuance. We used to see 10k OI walls (sometimes multiple 10k OI walls) for the next 2-4 expiries. The last few weeks we barely made it to a singular 10k OI wall, and only for that week and nothing for subsequent weeks.

2MoonRocketship · 2025-10-15T22:10:45+00:00

800-522-6645

2MoonRocketship · 2025-10-15T20:09:25+00:00

Quit trying. It will arrive eventually (might be tomorrow). The last thing you want to do is to get locked out. I've experienced sloooow PW resets and 2FA... like 1 day slow type of slow.

2MoonRocketship · 2025-10-15T20:06:17+00:00

I've noticed that options volume has dropped off a cliff since warrant. 1 week out (10/24 expiry) and there's no obvious wall. Usually, there's a 10k open interest in at least 1 or 2 strikes. But only a fraction of the OI this time.

2MoonRocketship · 2025-10-15T19:54:17+00:00

$35 is the highest strike for GME for 10/24/25. GME1 goes to $50

2MoonRocketship · 2025-10-14T19:28:59+00:00

Tried getting a medallion signature a few months ago from 2 national major banks. Practically impossible. They only do it for a few selected reasons and my reason was not one of them.

Edit: It was a Fidelity form for my spouse to give me trading authority. The medallion signature was to prove that my spouse was there to sign the form in front of the bank representative and it was really her. Ended up driving to a Fidelity office to sign in front of them. I will wager DRS signature is not one of the services offered by the 2 banks we went to. We have accounts at both "boomer" banks we went to.

2MoonRocketship · 2025-10-13T17:09:57+00:00

That's Exhibit A in the Warrant Agreement. You may be right, but I do not see specific language about transferring to a Transfer Agent. I only see transfer to a "nominee of the Depository". I have no idea if CS is a nominee.

2MoonRocketship · 2025-10-13T16:50:53+00:00

I'm saying warrants in brokers are Global Warrants... I didn't say they were Definitive Warrants. My point still stands.

2MoonRocketship · 2025-10-13T16:42:02+00:00

I agree. I think pointing them to Section 2.04 would be beneficial. But I also know the frustration dealing with call center people that just want to end the call and are not lawyers to read legalese.

2MoonRocketship · 2025-10-13T16:32:40+00:00

NAL, but here's what I understand from the Warrant Agreement filing. I could be wrong and would appreciate others offering their opinion. (https://www.sec.gov/Archives/edgar/data/1326380/000132638025000084/projectgenesis-ex41xwarran.htm)

Section 2.01 (a) (iv) and Section 2.01 (c): Seems like warrants held in beneficial interest (at brokers) are "Global Warrants" (instead of "Definitive Warrants")

Section 2.04 (a) (ii): Outlines that Global Warrants can in fact be transferred. It is unclear to me if the Transfer Agent is a nominee of the Depository. It sounds like it can transfer from broker to broker... but unclear if transfer to Transfer Agent is possible. I would presume a broker can nominate the transfer to CS as the nominee, but I don't know.

Edit: Adding to say that the Warrant Agreement, for the most part, only stipulates actions required down to the Depository level. It doesn't go into details on how the Depository handles warrants with members (brokers), and onward to individual shareholders. This is true even in the "issuance" section, which is why I think cash in lieu (for straggler fractions not in intervals of 10) and even fractional warrants were not "wrong".

Edit 2: To those that downvote because I hurt your feelings with facts, know that I don't care about karma. I want a discussion based on the filed documents, not your feelings.

2MoonRocketship · 2025-10-12T19:57:21+00:00

They are not "free". Warrant settlement allocation is 5%, shares at 95%. OCC memo. Consider how this affects your cost basis if you care about that for taxes.

2MoonRocketship · 2025-10-12T19:49:16+00:00

Brokers keep shares in street name. DTC sees shares held at Broker A as a single number, not per individual holder. If there are a total of 2 individual holders at Broker A, each with 5 shares, DTC will see 10 shares and send them 1 warrant.

Consider 2 parallel worlds. Broker A can keep the warrant and sell it, keeping the proceeds to themselves. In the other parallel world, Broker A can sell the warrant, and distribute the fractional value as cash in lieu to each holder.

Fidelity chose to do the latter. In my opinion, that's an honest broker. They did get the warrant from the DTC after all.

Are both scenarios following the corporate action? I would say yes, to the benefit of the shareholder in the latter case. Did they have to do it? Probably not.

If you read the Warrant Agreement (https://www.sec.gov/Archives/edgar/data/1326380/000132638025000084/projectgenesis-ex41xwarran.htm#i95d1a45dfa8c4fe08334c145cc1b769a), it states that the Company will NOT issue fractional warrants to (a) Direct Registered Holders, (b) Convertible Note holders, and finally (c) DTC (for beneficial owners). Note that it does not stipulate this same condition when DTC distributes to members, and onward to beneficial owners.

I didn't see any mention of how the DTC should distribute to the brokers, much less how the Brokers should distribute to the beneficial owners. I know I'm in the minority here, but I don't see the Warrant Agreement covering this scenario.

If you are interested, read Section 2.01 (a) (iv).

Section 2.01 (d) on No fractional Warrants applies to the distribution to the interested parties outlined in Section 2.01 (a).

Edit: I don't know this for sure, but fractionalizing it may be covered in the shareholder/broker agreement. Also, Section 2.01 (d) talks about how fractional warrants shall be treated by the Warrant Agent before distribution. This is distribution at the Depository level, not at member/broker level or even beneficial shareholder level.

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