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Gold/Mining/Energy : Precious metal company Warrants
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To: LLCF who wrote (310)1/7/2006 6:36:16 PM
From: tyc:>  Read Replies (2) of 681
 
I understand what you are saying about IV changing; warrants becoming cheaper and then more expensive. Currently, I try to ignore these fluctuations in value....to stick with the model. The one mistake with aemlw, was to sell some warrants because the IV took a jump (i.e. the warrants suddenly became "high-priced"). I sold some only to find that the increase preceded a jump in the stock price... I was left behind .

At the present time, my aemlw's are "overpriced", but I continue to monitor the delta by the model, and to control delta exposure by selling common stock. I wonder whether I shall have the nerve to sell short if the stock continues to climb when I run out of stock ! (Always with the intention to maintaining delta by buying back at lower prices. And always in the belief that there's plenty to do with proceeds of sale without becoming too exposed to the one issue).

This all boils down to my way-out belief that it is "leverage" that is important rather than Black-Scholes calculated prices. It's fun anyway !
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