No problem:
A warrant gives you the option to purchase a share of that particular company's stock at a stated price. For instance, as we are talking about para, the terms of the warrant state that one warrant entitles the owner to buy one share of para at 4 dollars. Since Para currently trades under 4 dollars, the actual value of the warrant on paper is zero at the moment. However, It is being traded up on expectation of positive events for Para. If para were to trade at 8, for instance, then the warrant should trade at roughly 4 dollars. Of course, for one reason or another the warrant doesn't always match exactly what it should. The owner of the warrant can choose to execute the option of the warrant (buy the stock at the given price), or simply sell the warrant after it has gone up. One more thing, most warrants have an expiration date.If not executed or sold by the date, the warrant is worthless. In the case of para, that date is Jan 23, 2001. Hope this helps. |
