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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: SwampDogg who wrote (10290)5/2/2006 8:55:43 PM
From: koan  Read Replies (1) of 78426
 
Why do we not discuss this one swamp dog. Maybe you are right I do not margin, so I would not know.

1) Do you not need to pay interest to margin? And what does it take to margin 1,000 shares $14,210 worth of stock. And with tight stops you can get whipsawed out. Pretty tricky business it seems to me.

2) If you margin and do not use tight stops and the stock drops in 1/2 in the next 6 months you lose $7,100 for 1,000 shares.

With the wts you only lose about $2,000 as you would probably retain over $1,500 in time/leverage value.

So the wts are safer on the downside without tight stops, but what is the IMPLIED costs of being whipsawed? We know there is going to be huge volitility.

Wts actually, often are not as volitile as the stock.

And as the stock moves into the money time value and leverage value is replaced by intrinsic value so you lose little really because of what you gained on the leverage. Intrinsic value (in the money portion).

If K goes to say $50 in the next 18 months the leverage will fall to about 1.1. So no perceptible decay.

So to leverage 5,000 shares one would need to buy $16,500 worth of wts. And would be controlling $71,000 worth of kinross.

What would it take to margin $71,000 worth of Kinross? and how would you work it?
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