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Gold/Mining/Energy : Canadian Warrants Only

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To: onepath who wrote (8898)	7/4/2009 7:32:20 AM
From: tyc:>	Read Replies (2) of 23091

On another thread I mentioned I had taken some TRX money off the table because of its recent decline. I should have mentioned I replaced it with warrants. Right now, we (and everyone else) are enthusiastic about LSG. Compare LSG's YTD chart with that of TRX.... they both show a 100% gain . IMHO the TRX's ytd chart is the equal of LSG's. The 100 day Historic Volatility of TRX is 96%. Given that volatility, the trend of the stock YTD, and the uncertainty of events to come (risk), the warrants deserve attention. Using the hoadley calculator and Black Scholes, one calculates an option delta of 50% (from memory). That says that 2 warrants would provide a hedge for 1 share of common stock. In other words, the warrant has an immediate upside equal to 50% of a common share.... and 50% of a common share is worth considerably more than the current warrant price. (Personally, I don't think the delta is actually as high as BS indicates.... I think it is more like 30% at current levels, increasing as/if the stock moves higher. Even this lower delta is attractive to me). The warrants appear illiquid at present. If one buys them there is no guarantee that one would find a subsequent buyer. so Caveat Emptor.

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