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Gold/Mining/Energy : Precious and Base Metal Investing
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To: Tommaso who wrote (18530)8/28/2003 6:35:13 PM
From: LLCF  Read Replies (3) of 39344
 
<re: time premium = 35% vs 70% of cost of warrant being 'better'... >

As my previous post stated the warrants ARE cheaper now as priced in VOL terms [the standard in speaking of these things], but they COULD be more expensive and still fit your criteria above. When they go in the money away from the stike this happens. If you remember, they were actually 100% out of the money [time premium = 100%] not long ago... that never makes an option or warrant expensive in itself.

Check out the NNO warrants we spoke of a while back... S=1.85, X=2.00, warrants price [100% premo]?? .70! Mid 50's vol. If you asked me if I wanted to own them or be short them I'd still say own them.

As for "at the time it made more sense to buy the stock":

This statement is complete hindsight... ie. you're saying "the warrants didn't perform as priced [they are cheaper now] so you shouldn't have bought them, you should have bought the stock". It has nothing to do with options valuation analysis.

Now that doesn't take away from the fact that you WERE correct... the stock HAS BEEN a better buy than the stock so far.

And lastly: "... bought the warrants @ 1.00 still under water"

Well you needed the last little push at the end of the day to get those that bought the stock at the last peak to get dry. :)

Just keeping you abreast of the way warrants work and are priced :)

DAK
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