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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: SwampDogg who wrote (10290)	5/2/2006 8:55:43 PM
From: koan	Read Replies (1) \| Respond to of 78426

Why do we not discuss this one swamp dog. Maybe you are right I do not margin, so I would not know. 1) Do you not need to pay interest to margin? And what does it take to margin 1,000 shares $14,210 worth of stock. And with tight stops you can get whipsawed out. Pretty tricky business it seems to me. 2) If you margin and do not use tight stops and the stock drops in 1/2 in the next 6 months you lose $7,100 for 1,000 shares. With the wts you only lose about $2,000 as you would probably retain over $1,500 in time/leverage value. So the wts are safer on the downside without tight stops, but what is the IMPLIED costs of being whipsawed? We know there is going to be huge volitility. Wts actually, often are not as volitile as the stock. And as the stock moves into the money time value and leverage value is replaced by intrinsic value so you lose little really because of what you gained on the leverage. Intrinsic value (in the money portion). If K goes to say $50 in the next 18 months the leverage will fall to about 1.1. So no perceptible decay. So to leverage 5,000 shares one would need to buy $16,500 worth of wts. And would be controlling $71,000 worth of kinross. What would it take to margin $71,000 worth of Kinross? and how would you work it?

To: SwampDogg who wrote (10290)	5/2/2006 9:25:34 PM
From: loantech	Respond to of 78426

Hello swamppy good to see you around. We need your prognostications here.

To: SwampDogg who wrote (10290)	5/2/2006 10:10:41 PM
From: LLCF	Respond to of 78426

I think the point being missed is that leverage is pretty meaningless in the options valuation world... for example, if those warrants expired in a month, they'd be trading for a nickle and have leverage of hundreds.... SO? That said I disagree that out of the money warrants are made to be sold as covered calls. Cheap warrants are much safer to hold than stock if you're expecting a correction for instance, assuming you own warrants covering the number of shares you would have owned. dAK