Stocks Crossing The 13 Week Moving Average <$10.01 Message Board

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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01

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To: cool who wrote (1313)	5/7/1998 12:09:00 PM
From: James Strauss	Read Replies (2) of 13094

Warrants... >>>Help needed!! I am trying to understand warrants-- FCSE - 4 1/16 FCSEW - 25/32 good for 1.811 shares of FCSE Warrants effective date--5/23/98 @ $6.75 ea What am I betting on if I buy the warrants?<<< ********************************************************************** John: Think of a Warrant as a long term option... You pay a premium to buy a stock at a specific price... What you're looking for is a situation where you think the stock price will appreciate greater than the Warrant conversion price... In the case of FCSE, the stock price is below the Warrant conversion price of 6.75... That's why the Warrant price is dropping... Warrants can be bought and sold like stocks during their life... In this case, their life ends on 5/23/98... To be more specific, the Warrants are currently trading for .50... If you bought 1000 Warrants (.50 x 1000) your cost would be $500... If you wanted to convert the to shares, you could buy 1.811 shares for each Warrant you own... (1.811 x 1000 Warrants) = 1811 shares of FCSE at 6.75 = $12,224.25 cost for the shares... Your total cost would be: Warrants $500 Stock $12224.25 ~~~~~~~~~~ Total $12724.25 Plus Commissions... If you bought the 1811 shares directly, they would cost (1811 x 3.94) = $7135.34... Obviously, the Warrants are not a good deal at this time... Jim

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