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Gold/Mining/Energy : Abnormal Volume and Block Trades
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To: keith massey who wrote (1884)6/12/1997 9:51:00 PM
From: Tom McIlwain   of 2340
 
Keith:
Re Warrants:

Your method of looking up warrant excercise prices and expiry dates by looking up old news releases is a good one. Also, you can certainly get that information from a full service broker and I am even usually able to get it from my discount broker. You can also phone either the company issuing the warrants or the stock exchange the company is listed on. Both sources will always be able to provide such information. For mining stocks, I find the listings in The Northern Miner very useful for providing this info. It is essential to get this info before you purchase a warrant.

You are absolutely right that you are out of luck if the warrant expires out of money and you are still holding it. Also, be aware that warrants generally trade at a premium to their conversion value. As the date of expiry approaches, this premium will diminish, for obvious reasons.

I would really not recommend getting too involved in buying warrants in a bear market like this if you are just learning about them. The risk of a 100% loss is fairly high.

One other thing of interest about warrants. If you are holding shares in a stock it is a good idea to know when any warrants or options for that matter are due to expire. If the warrants are in the money as the expiry date nears, you will often see a drop in the share price up to the exercise date. Why? Because people holding warrants are selling stock to raise money to exercise warrants they are holding. Same can hold true for options. This can provide an interesting buying opportunity for the stock if you are aware of it.

Hope this helps.

Tom McIlwain
(who has lost more money than he has made with warrants)
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