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Politics : Gold and Silver Stocks and Related Commentary -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (6761)	2/17/2005 6:55:36 PM
From: koan	Read Replies (3) \| Respond to of 18308

Someone on Stockhouse asked why the wts were better than the stock on the upside, and safer than the stock on the downside, so as I already had to do it here it is. Ok here we go-lol. Now remember we are only comparing 1 share of stock to one wt! A $.70 purchase price compared to a $.27 purchase price. Wts contain intrinsic value, time value and leverage value. All three are fully in play with regard to the relative price of the BWR stock (.70) to the wts (.27), strike price ($1) and time left (4 years). Einsteins theory of relativity-lol. So lets take a what if proposition: Lets say first of all the stock drops in half to .35. Well, one can see the most the wt can drop is .27. And if the stock turned out to be another Enron then it would drop to zero and you would lose .70. but once again the wt can only drop .27. But lets say the stock only drops .20 to .55. So the stock would have dropped .20, but because the wts have 4 years left, they retain both time value and leverage value and would probably not drop below .17 (the lowest they have ever been) which is only a dime. So on the upside you are getting 3 to 1 leverage and on the downside you would lose only half, or less if it dropped further. Capeesh-lol? NewsBlast Sign-Up StockHouse NewsBlast: Receive company sponsored news and information via email.

To: koan who wrote (6761)	2/17/2005 10:16:43 PM
From: TheSlowLane	Read Replies (1) \| Respond to of 18308

charles - are you still following PFN? Man, that thing did the best Monica Lewinsky impression for the longest time. Seems like it might be ready to head up but...don't know if I could bring myself to go there again. Hmmmm... Paul