Why buy stock warrant for $2, if underlying stock trades at $3?

First of all, the warrant seems to be trading at intrinsic value (Spot - Strike) which seems unusual for an option with 18 months to expiry, but let's ignore that for now:

Suppose you buy the stock and it goes down to $0.25. You've then lost $2.75 on the stock. If you instead buy the warrant, all you've lost is the $2 you paid for the warrant, since you wouldn't exercise it to buy the stock for $1 when you could buy the stock for $0.25. So your upside payoff is the same, but your downside is limited to the price of the warrant.

That's the reason that warrants (and options in general) trade for a premium over their intrinsic value. You are buying protection against a drop in the stock price.

I prefer stock because for $1 more each share, I won't worry if stock price plummets below warrant price. if I buy warrant, I will lose all my money if DOC.V plummets and stays below $2 before expiration!!!

Actually, you'll lose more if the stock goes below the strike for the reason mentioned above.

If you have a fixed amount to invest (say $3,000), and you are deciding between buying 1,000 shares or 1,500 warrants, then you have a different risk profile because you have 50% more exposure with options called leverage, but if you compare buying 1,000 warrants versus 1,000 shares, your downside is limited at the cost of the warrant, versus the current price of the shares (i.e. you can only lose $3 per share by buying stock but you an only lose $2 per share buying options).

Additional answer based on edit:

I prefer stock because for $1 more each share, if stock price plummets below warrant price BEFORE expiration I can just bag hold. if it skyrockets after 02 JUN 2022, I will profit.

Or, you could but the stock outright on 02 JUN 2022 for less than $2, and then when is skyrockets you'll profit even more.

There are scenarios when buying a stock would have been better then buying an option, but the point of options is to change the risk profile (e.g. reduce downside risk at the expense of upfront cost). Just like with regular insurance - sometimes it pays off for you and sometimes it doesn't.

Suppose that A buys a stock for $3. B buys a warrant for $2 that can be exercised for $1.

• If it climbs to $6, A sells, and gains $3. B exercises, sells, and gains $3
• If it stays at $3, both break even.
• If it drops to $2, A sells, and loses $1. B exercises, sells, and loses $1 (or could choose to not exercise, and lose $2).
• If it drops to $0.50, A sells, and loses $2.50. B does nothing, and loses $2.
• if it shares lose all value, A is out $3, while B is still only out $2.

Basically, buying the warrant rather than the stock saves you money in the unlikely event that the total price drops below $1, at the cost of not letting you have claimed stock in hand until purchase date.

I won't worry if stock price plummets below warrant price

Why wouldn't you worry if it lost a dollar of value? That means you lost money. Holding on to a stock doesn't mean you'll get your money back.

Suppose you're given the choice between the following options:

A) Pay three dollars, and get the stock

B) Pay three dollars, and get the stock. If the stock tanks, you can sell the stock back for $1.

As long as the stock stays above $1, the two are equivalent. But if the stock goes below $1, B) lets you get some of your money back. So clearly B) is better.

And B) is equivalent to the warrant: if the stock stays above $1, you'll pay $2 for the warrant, and $1 for the stock, for a total of $3. If the stock tanks, you won't buy the stock, giving you a loss of $2, which is the same as paying $3 and getting $1 back.

The warrant only ties up 2/3 the capital the stock ties up and they both have the same upside. If you sell before the expiration date of the warrant, your returns will be 1/3 higher for the warrant compared to the stock.

Why would anyone buy the stock under those circumstances unless they expected a dividend or wanted voting rights?