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Strategies & Market Trends : The Rational Analyst
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To: HeyRainier who wrote (1247)6/29/1998 5:20:00 PM
From: Smooth Drive  Read Replies (1) of 1720
 
Hi Rainier,

A quick overview of warrants, as follows:

1. They are a long-term option to buy a stock at a certain fixed cost.

2. Usually attached to the sale of a new issue stock or bond. (A sweetener if you will.)

3. A typical attachment might have a new issue going at 50 and the warrant at 65, with the warrant expiring in, say 5 years. Warrants almost always issued at substantial premium to stocks current price.

4. Warrants usually have a wait period (perhaps one year) before they can be exercised.

5. Most warrants have a certain life, but some are issued perpetual.

6. They trade separate from the stock on the same exchange as the stock.

7. Like a call option out the money, you wouldn't exercise an expiring 65 warrant if the stock was selling for 60.

Take care,

Eric
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