MEMC INT'L. (WFR -NYSE) The Sleeping Giant? Message Board

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Technology Stocks : MEMC INT'L. (WFR -NYSE) The Sleeping Giant?

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To: SE who wrote (4296)	3/22/1999 10:37:00 PM
From: Carl R.	Read Replies (1) of 4697

I agree that if the stock gets above 6 7/8 there is a free rein to short the stock and buy the rights, which of course is why the stock can't get above 6 7/8. And you are right that in a typical warrant call the stock starts above the exercise price and falls to the exercise price. But the situation here is not as different as you imagine it. The value of the warrant will still rise or fall as the stock price rises or falls, and thus there is an arbitrage play. But I am not an arbitrageur, so I can't give you specifics. Probably the play is to short the stock, sell covered puts, and buy rights to protect from the upside. Carl

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