fuzzyjr - There is no problem buying warrants instead of shares. In the case of a buyout it is easy enough to short the shares and exercise the warrants to cover the shorts all in the same day. In situations like this brokerage firms are more than happy to lend you the money to do these transactions. They know they are covered within a 5 day period including weekends and you would only pay a few days on interst on the borrowed funds from the short. With T+2 settlement now it has become less likely that there would be a big discrepancy in pricing differentials between shares and warrants in these situations. The only issue that may come into play would be the exercising of warrants in a registered account over a month end. Brokerages and trustees do not like to be in a negative position in these RSP's, RESP's and TSFA's over a month end. Generally on a buyout offer the share price will stay within a couple of percent of the offer price until there has been a special shareholders meeting to accept or reject the offer so there could be 30 to 45 days to allow investors to move stuff around. You would have to make those calculations in the context of the market at the time of considering your actions.

tada