Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: tonyt who wrote (14267)	2/5/1998 8:08:00 AM
From: Russian Bear	Read Replies (1) \| Respond to of 32384

<<The warrant would be worthless if the stock was at $6. (actually it would trade at pennies)>> Tony, That entirely depends on the timing of the hypothesized debacle. If it occurred in May, 2000, then I would agree with your analysis. If, however, it occurred tomorrow, the warrants would most certainly not trade "at pennies." (The strike price would be less than 20% above the current price, with 28 months to go...) They would suffer a higher decline than the common, percentage-wise, but the monetary losses on 1000 LGNDW would be substantially less than those on 1000 LGND. I must add to the above that I find it hard to imagine LGND at 6, in any event. RB

To: tonyt who wrote (14267)	2/5/1998 10:51:00 AM
From: Andreas Helke	Respond to of 32384

I would be ready to pay quite a bit more than pennies for Ligand Warrants if the Ligand stock was at $6. Since I am not the only one with that opinion the warrants will keep quite a bit of value even if they no longer have intrinsic value. This is similar to paying money for worthless (out of the money) options. I think comparing the actual price of the warrants with the value calculated with an options pricing model is the best method to determine if the warrants are over or underpriced compared to the stock. I think that the Farallon ownership of a large warrant position may create quite a bit of opportunities to buy the warrants at an attractive level. As you and others have said recently and as I have determined some time ago it is a better idea to buy Ligand on margin than to buy Ligand warrants if you intend to keep the stock until the warrants expire. Of course if you want more leverage you can buy the warrants on margin. Or if you sell fast enough you will get some of the time premium back. You can even do arbitrage if you buy warrants when they are too cheap compared to the options pricing model and sell them when they are correctly valued or too expensive. If you want to eliminate the market risk you have to short and equivalent number of Ligand shares. But I think with the uncertainty created by Farallon and the decaying time value of the warrants this is not a good strategy. If you leave out the short position you will profit from the likely long term share price appreciation of Ligand. Andreas

To: tonyt who wrote (14267)	2/5/1998 12:17:00 PM
From: Flagrante Delictu	Read Replies (1) \| Respond to of 32384

tonyt,>> The warrant would be worthless if the stock was at $6. {actually it would trade at pennies} <<This statement which has already been addressed by Russian Bear clearly points out to one & all how much you know about what you are talking about. In combination with your previous statement that you had never seen an option, with more than 30 days left to expiration, decline by 20% in one day, these 2 statements loudly proclaim to one & all that you know not whereof you speak in the area of warrants or options. Yet you are ready with proclamations at the drop of a hat. However, we have seen you are not nearly as ready to answer questions. Why is that? Bernie.