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Biotech / Medical : ORTC Ortec International

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To: fut_trade who wrote (26)	12/14/1997 4:48:00 PM
From: Jake	of 272

Once the warrants are in the money the warrants participate dollar for dollar in the action of the stock. You get more mileage out of your investment. For example when the stock is at $15 you can get 500 warrants for each purchase of 100 shares. If the stock goes to $20 you will make $5 x 500 - erosion of premium instead of $5 x 100. Assuming the current $3 premium goes to zero you worst case is $2 X 500 or $1000 versus $5 x 100 or $500. Thereafter you participate dollar for dollar until the warrants expire. At that time you have to decide to purchase the stock or sell the warrants. The estimate that I've seen is that sometime next year the stock will hit $23. Assuming a current share price of $15 and warrant price of $3 you would net $8 x 100 or $800 on the purchase of the shares and ($8-$3) x 500 or $2500 on the purchase of the warrants. At conversion time you could sell some of the warrants to buy the stock if you are still interested in the stock. All of this moot if the stock does not move up beyond $18 (conversion ($15) plus premium ($3)).

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