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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: koan who wrote (16196)7/14/2006 5:59:48 PM
From: SwampDogg  Read Replies (1) of 78416
 
The leverage is totally dependent on where the stock ends up in the next year and is certainly not what you say

If the stock gets to $25 by 12/07
The return on the stock would be 96.80%
The return on the wts would be 270%
Leverage is almost 3:1

If the stock gets to $20 by 12/07
The return on the stock would be 57.48%
The return on the wts would be 85.00%

If the stock gets to $18.00 by 12/07
The return on the stock would be 41.73%
The return on the wts would be 11.11%

If the stock gets to $15 by 12/07
The return on the stock would be 18.11%
The wts would be worthless (loss of 100%)

Also take into account what would happen if there is merger. You may be SOL.
The inherent leverge of the wts is 3:1 but only when the stock gets above strike and may not track well as you have $0.90 of time value to work off.
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