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Gold/Mining/Energy : Corner Bay Silver (BAY.T) -- Ignore unavailable to you. Want to Upgrade?

To: Canuck Dave who wrote (4308)	6/20/2002 4:34:14 AM
From: Step1	Respond to of 4409

Canuck Dave, great site for option pricing. I did a quick calc for PAA at 14.90 ( I think the high recently was around 15.00) and got 8.58 for the warrant (then you have to divide by five -- the terms say 0.1925 per Bay share) and this would give you a 7.44 bay price. Hmmm , not bad but not great, best was to sell all at the top... I sold half, so I can`t really complain ... I think that what this new deal does though is throw a lot of volatility (like it or not) back into BAY. 5 years is an excellent time window. You won`t find options that are written for that time frame ( I believe LEAPS are for 2 years max) so it makes using the formula a little hard to apply I think... Since things like interest rates and volatility will certainly change a lot within five years. My guess is that the formula would work best for options with less than a one year expiry. In options, volatility is a big part of the premium. I am no expert at options, in fact still sweating it a lot, but to convince yourself look at DOW options versus Naz options . So the more volatile PMs and therefore PMs stocks become, the higher the premium we could expect. If PAA were to return to its all time high, with high volatility in gold and silver, then it might pay off. (just for fun I put in 16.00 cad PAA with various values for volatility ...) well good enough I suppose , thx for the link. Step1

To: Canuck Dave who wrote (4308)	6/20/2002 9:26:50 AM
From: IngotWeTrust	Read Replies (1) \| Respond to of 4409

Black Scholes: Interest on option pricing: The model is built on entering into that variables' blank either US Treasury Interest Rate on its 30-Day paper or--if you live elsewhere in the world and are "ruled" by another benchmark--the 30-Day Libor Rate out of London. Therefore, the .02 you plugged in is on the "low side" of selections. Just thot you'd like to know. g_t

To: Canuck Dave who wrote (4308)	6/20/2002 1:28:20 PM
From: arizzzona	Read Replies (1) \| Respond to of 4409

Hi, Canuck Dave. Looks like it's settled just north of $5. This is a full 75 cents better than I had expected to wake up to. Then again I know nothing about pricing options. Thanks for the link to that site. I'll be sure to add it to my investing e-library. I imagine later on these warrants will trade under some symbol. Something I'll keep in mind. I sold more at $5.05. There's just too much else I want to get a position in (especially micro-cap Homeland Defense stocks). Really looking forward to hearing "the story." Something in me thinks we haven't see the last twist and turn in this yet. ....making me wary of selling my BAY. We'll see. -AZ