Factual Data (FDCC) Message Board

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Technology Stocks : Factual Data (FDCC)

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To: Bill Schrader who wrote (10)	7/15/1998 7:37:00 PM
From: KipferlMeister	Read Replies (1) of 44

<<ay "track 1 for 1" do you mean for every dollar the common goes up, the warrants will go up the same?>> Yup, that's what I mean. The warrants have a strike (exercise price) of $7.15. With the stock at $9.25, the warrants are in the money by $2.10. That means that at $3.125, the warrants are trading at a $1 premium to their intrinsic value. You're always going to be paying some sort of premium with warrants. This premium generally depends on how close to the strike price the underlying stock is, and how much time the warrants have left til expiration. We have at least 10 months left before the FDCCWs are called, plus they're already well into the money; a $1.00 premium is well warranted (excuse the pun). A few weeks ago with the stock only at $7.50, the warrants were already at $2.50 -- practically all premium. Apparently, your friend at FBW wasn't the only one buying/pushing the warrants as the preferred play. They'd gotten ahead of themselves but have since failed to track the stock. For them to continue to lag, would mean a further erosion of the premium which seems very unlikely as $1.00 is pretty reasonable. Stranger things have happened, tho. -Michael

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