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Pastimes : son of T/FIF

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To: Biomaven who wrote (107)	8/27/1999 12:43:00 AM
From: LLCF	Read Replies (1) of 673

<I think you have the explanation here, John. This essentially means that the time-premium of the warrant is shot once the stock exceeds the $9.10 price. The fact that it needs to do so for a month doesn't really help - once the stock goes above $9.10 there can't be any time premium left in the warrant - you'll only get some time premium back if the stock goes down again. > I have to respectfully disagree with part of your statement: "once the stock goes above $9.10 there can't be any time premium left in the warrant" The next statement : "you'll only get some time premium back if the stock goes down again." shows why. There is still large potential premium in this option if they don't get called. There only can't be premium left when they're called, which of course would be done as soon as they meet the criteria. I don't have the software to value the premium value of the warrant {like a "knock out put" exotic option} but it's way too early to write the premium out of these... <Technically the warrant is still a shade better than the stock (slightly more downside protection as you'll get some time premium back if the stock declines substantially) but this is probably more than offset by the bigger spread and reduced liquidity. So personally I wouldn't bother with the warrant at this point.> Again, to respectfully disagree, I wouldn't own the stock here... only the warrant... they've been very liquid, and IMO just eyeballing it the premium is probably worth at least 1/2... of course they decay like nuts if the stock stays above 9.10. Again, I'm taking the info provided as the rule here... ie. the stock needs to stay above 9.10 for 30 days... the chance of that NOT happening is HUGE. That said, it's going to be interesting if there are powers that be that want it to stay up... or conversly stay down due to positions!!! Tons of fun. DAK DAK

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