Take a good look at the warrants (NOOFW). They present some significant upside potential at minimal risk. They expire in 2003 and have a strike price of $6 3/4 per share. They are commonly not traded by individuals because of their misunderstanding of what warrants are.
1. Warrants are similar to options, only warrants have much later expiration dates; they could be fairly compared to LEAPs.
2. Warrants are freely traded. As long as you don't trade really big blocks (>50K shares), the liquidity won't be a problem. I would recommend trading with 10K blocks, just to ensure a fair value.
3. A warrant is the right to buy a common share at a specified price any time before a predetermined date.
Example: Here, a warrant holder would be able to buy a share of NOOF common at $6 3/4 any time before Feb 18, 2003. NOOFW is now trading around $1 1/4. Let's say you buy a warrant; you then would need the common(now trading at $4 1/4) to be trading for at least $8 to break even. That's almost a 100% gain in the common stock just to break even! It doesn't sound very "low-risk" at all.
Well, it depends on what your time frame is. It comes down to whether you think NOOF will ever reach $8, $10, $20.
If you understand the significance of NOOF's recent announcements, you should be confident that you will make money by owning NOOF. The fundamentals are all there, technical outlook looks good, and with a float of under 4M shares, expect some major percentage moves. Recent slandering of management has done little except to retard an already strong uptrend. With the acquisition of IGI, NOOF is poised to take the porn-internet industry by storm. Not to mention their industry provides one of the few truly inelastic goods known to the world. Now the question is when will it reach $20?
Look at how the warrants have lost little in value as the common has lost almost 25%. If the warrants were efficiently priced they would be declining as well. Why aren't they? Simply because they're already trading at a bargain price. Why not take advantage of others' ignorance?
Of course, I don't like to waste my time. I'm not doing this for anybody's good except my own. This entire message's sole purpose is only to speed up the realization of my profits. If I have to help some people along the way in order to do that, so be it. Good luck.
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