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Microcap & Penny Stocks : Microvision (MVIS)
MVIS 0.980+5.4%Jan 12 3:59 PM EST
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To: mark calder who wrote (2644)5/23/1999 3:40:00 PM
From: Obewon  Read Replies (2) of 7721
 
You might be right in the short-term (one to two weeks) but as I stated in my last post, the limited time horizon acts as a brake on any run-up in the warrants not accompanied by a run-up by the common shares.

Much more likely is that someone owning alot of warrants already will start purchasing large amounts of the common shares (possibly on margin) resulting in the price of both increasing (but as you stated, the warrants will increase more on a percentage basis). Just before being forced to convert, he/she sells warrants to lock in the gain and buys puts on the stock. Because the common stock price is not directly affected by these transactions, the warrants should maintain their level even in the face of selling pressure (otherwise an arbitrage opportunity exists). He/she then sells the common stock, decreasing the price of both warrants and common plus causing the puts to be "in the money". This is a simplistic representation but presents a accurate picture of what could happen.

Based on this, I would not be surprised to see us blow through $35/common share in the next three weeks. The downside is that following the forced conversion, we are likely to see a pullback to the $28-$30 range in a relatively short period.

All that being said, I will be holding my warrants and converting them when necessary. Long-term success is more important to me that the short thrill of a successful trade. (Plus I want to avoid the tax hit as long as possible!)

Obewon

(PS Of course, I'm not sure whether MVIS shares are optionable so it may be that people cannot buy puts.)

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