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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments
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To: moose100 who wrote (6019)1/13/1999 8:20:00 AM
From: RockyBalboa  Read Replies (2) of 18998
 
Could you explain to me what it is to have warrants called. If the strike price is 10.00 and the stock is at 16.00 what will happen. What do I need to know when they call warrants. Do I need to have power dry for this.

As U didnt give the name of the company just general remarks.

Usually, a warrant refers to newly issued stock in turn for the strike price. The IPO filings (or any filings related to the warrants issue) contain certain clauses about the "warrant redemption" or as you said "call of the warrants". Examples are that a co is allowed to call - and "redeem at say $0.01, the warrants at a level of 150% of the strike for 10 days". Economically, it makes no sense to get $0.01, so you declare that you want to exercise the calls. Or sell the calls at market.
If you exercise, you pay the strike, $10 and get newly issued stock. Which you can keep or sell at the market (>$10 ??). If there is no market for the warrants,it is a good strategy to short the stock against that warrant and exercise the warrant, pay $10, get the shares and cover the previously sold short shares (> $10...) with that delivery.

If warrants are called and you do nothing, you might put the warrants value at risk and only get the redemption price, $0.01 if the clauses are so (in general, they are like that). To find out, have a look into the companies filings at the edgar.

C.
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