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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers
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To: tyc:> who wrote (31532)2/1/2007 8:18:32 PM
From: Chuckles_Bee  Read Replies (1) of 78426
 
"It seems to me one buys warrants only because of the leverage"
Don't forget volatility.

Given the yeehaw! example of a stock doubling (everyone sure seems casual about that assumption!)...look at AEM vs AEMLW:
AEM = 40.65
AEMLW = 22.54
The warrant is for 19.00 (Nov 07).

If, using round numbers, AEM goes +40 and AEMLW goes +40...my 22.54 becomes 62.54, which isn't even 200% gain.
BUT...now look at a 1 year chart of the two...and focus on May, Sept and Dec.

I don't care if the stock ever doubles as long as the stock/warrants keep moving up and down like that. I don't catch the bottoms or tops, but I catch enough.

I guess you could still just call it leverage (and it obviously requires trading vs holding), but it doesn't expect/need a stock to double to be fun/major profitable.
....which addresses your point "one might as well hold the stock". I routinely benefit from 2-3X volatility and at half the price of owning shares, without expecting a double....so why would I ever buy the stock?

I'm probably just babbling "we already said/know that" crap, so just for giggles....some Steven Wright "isms"
- A clear conscience is usually the sign of a bad memory.
- Depression is merely anger without enthusiasm.
- Ambition is a poor excuse for not having enough sense to be lazy.
- A conclusion is the place where you got tired of thinking.
- Everyone has a photographic memory; some just don't have film.

...and the reason the world is where it is...
- The problem with the gene pool is that there is no lifeguard.

CB.
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