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Gold/Mining/Energy : Precious metal company Warrants -- Ignore unavailable to you. Want to Upgrade?

To: tyc:> who wrote (270)	8/7/2005 2:15:33 PM
From: Julian Augustus	Respond to of 681

This seems to offer good leverage for the warrant; (i.e if the stock price doubles to US$26.16, the intrinsic value of the warrant would be ($26.16 - $19=) $7.16,which is 4.6x its current price of $1.55). I wonder why your chart says it's over-priced ? Because leverage and price are two different things. It was marked as overpriced at that time because the market price was more than 10% above its theoretical value as calculated by the Black-Scholes model. That changes as prices go up and down in the market. Also note the what-if in your question; IF the stock price doubles, the B-S model would calculate a different figure for the value of the warrant. Your chart shows 24% as the Historic volatility of the common. However, this page shows recent (9-day) volatility increasing to 35%. As you are aware, the volatility can be calculated for any period you want. I use 30-day annualized volatilities because I decided after a bit of experimentation that they gave me the most stable conservative estimates of warrant values. The current surge in volatility could indicate a lively period ahead for this well leveraged warrant. Indeed.