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Gold/Mining/Energy : Arcon Energy (MIDL Presently) The Ultimate Sleeper
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To: Islander who wrote (1637)5/30/1998 8:34:00 AM
From: xdll  Read Replies (3) of 4142
 
The only difference in terms of share accumulation is that the conversion dates on the new shares are still oct98 instead of '99.

In terms of the $15 Monday, perhaps you are right but I am assuming a relatively efficient market which will price in the fact that it has split. (BTW, did you see that massive screw up on Nasdaq indexes last week when they didn't take into account the Ericsson split)

In terms of the options analogy, I am not all that facile with options but using the work of Black Scholes Merton, one can price in volatility and time value of money to come up with a fair value for an option. If one thinks of the prefered shares as in the money calls (with no premium) to buy shares in October, I presume it should be possible to price out the fair value given the time and volatility of the shares.

So for example, if I say in october I can buy a share for .43 ($15/35 shares) [$15 being the repriced for split midlp] then it is like buying a call at an october strike of $0.40 for $0.03 each. (or equally a call at an october strike of $0.25 for $0.18 I guess).

Now, I don't know if this makes sense really... as I stated earlier I know very little about options and options theory. But I am trying to get a handle on the time value/volatility pricing.

The warrants are simple since you can exercise them immediately and thus this isn't relevant.

Is my question clear? Can you help?
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