OP's information is a bit sparse. A SPAC is a regular stock on the stock market and its share price is tied directly to the amount of money used to instantiate it in the first place. In general, you hold it for as long as you want and it will bounce around within a dollar of its baseline price. You can sell it at any point and get your money back. I can't really think of a scenario in which you would lose more than a few percentage points of your money without a lot of warning.

The downside of SPACs is that if they don't do a reverse merger they're unlikely to appreciate in value like a normal stock (or index), so you're basically gambling the opportunity cost against a chance of significant gain.

Yes. SPACS are not stocks, not sure what the other replier is talking about (they're SPVs).

If a SPAC doesn't find a company to merge with you get your money back and some interest. If a SPAC finds a company, you have the choice to (1) stay invested in the SPAC and therefore the company or (2) refuse the merger and get your money back with interest.

Interestingly when you invest in a SPAC you actually get two things (1) the option to invest in the company they find, and (2) a warrant to buy even more stock. What's even more interesting is that you could actually sell this warrant while keeping the option to invest in the company the SPAC finds.

One other point that I don't understand well with SPACs warrants. Once the merger has completed, it doesn't seem like the warrant price really tracks the underlying stock with weird situations where the warrant is priced below intrinsic value. Is there a straight arbitrage to make there or am I missing something?

Not sure I understand what you mean at the end of your comment. If you sell the warrant, you no longer hold the option to buy the underlying stock, do you?