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Politics : Koan and Ralph Emerson's Far Right and Far Left Whacked Out
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To: E. Charters who wrote (21)2/28/2007 6:10:11 PM
From: tyc:>  Read Replies (2) of 103
 
>>Any topic will do. Even warrants and the underlying stock

I hope you mean what you say, EC, because I'd like to talk about warrants again, yes even RNG warrants. I feel as if I have a tiger by the tail in my love affair with warrants and I hope you will rebut my thinking, allowing me to let go !

I believe essential to the understanding of warrants if the concept of DELTA in option parlance. Delta is the percentage of the price change of the common stock that the warrant will enjoy. e.g. If the warrant will climb one penny for every two pennies that the warrant moves from the current level, its delta is 50%. It's common knowledge that an option has a delta of ~50% at the strike price. Below the strike price it is less than 50%; above the strike it is more than 50%, increasing 'till it reaches 100%.

I have a bit of arithmetic that tells me what the delta is, given the warrant price, the stock price and the strike price. Today it told me that rng.wts have a delta of 35%.

It's only logical that if its delta is 35%, the warrant will move the same amount as 35% of a common stock. 35% of $RNG price (@3.75) is $1.31. Now which is better, to buy the stock @ $1.31 or to buy the warrant @ .67c. Because I am confident that RNG will go higher I bought yet more warrants @ .67c. What would you do and why ?

(bear in mnd that if/as the stock price increases the DELTA increases also )
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