Paul F.,
Your post was excellent. Yes you are right on with your analysis of Intel's Warrants. Unfortunately, of the 10 million INTCW currently outstanding, there is now only a short position of over 6 million, it was well over 9 million last month. However, the 6 million plus short position, is still a very large position, on a percentage of float, basis.
What I believe others are missing, is the fact that they are only looking at how a market maker prices an option, Andrew is not taking into account the effects of supply and demand, (which option writers do not care about). The big difference between an option and Intel's Warrants is that new options can be written up to the day of expiration. Therefore, potential suppy is unlimited. However, unless Intel puts back into the market the Warrants that they have already repurchased, there will continue to be only a finite number of Warrants available for short covering.
In addition, Andrew does not consider the 1/2+ point buy/sell spread on the WNLAH LEAPS, vs only the 1/8 to 1/4 spread on the Warrants. Nor does he consider that the Warrants can be margined, while the options can not.
Paul would you please e-mail.
Jules |
