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Technology Stocks : IFLY - travel sales on the web pure play -- Ignore unavailable to you. Want to Upgrade?

To: Secret_Agent_Man who wrote (117)	4/10/1998 12:15:00 PM
From: Glen Abbey	Read Replies (1) \| Respond to of 4761

My head is spinning.... I am a basic math person... here's my take.. 1)The bottom line is we paid approx $1 or less for the right to buy the stock at $6.25. 2)We will exercise if we can make a profit over this $7.25 investment by holding the stock or selling it. We will sell the warrant, if someone is willing to give us enough of an immediate profit on the warrants to justify giving away the stocks upside. 3)The company has retained the right to limit our gain by calling the warrants anytime after the price holds at or above $10 for a prescribed period of time. If called, we have sufficient time to exercise the warrants or sell the warrants - we would not want to let them expire under these circumstances or be called by the company. 4)This is a present value hedge game, nothing more. The $1 gets you $2.75+ when exercising if you are confident that the stock is going much higher than $10. 5)For $1 you get the right to watch the stock's performance before you invest the remaining $6.25. 6)If you hold your warrants and the stock does not get up past $7.25 you lose your $1 at the expiry date. 7)Effectively, if you think the stock is going to $20 quickly, yesterday we had the opportunity to get 5+ plays with the warrants with the money we would have spent on one IFLY share. That is why there is a premium. We only get more plays on the future profits through the warrants while the warrants are cheaper than the stock. 8)Somebody will pay you more for your warrant if they think their hedge bet (future value of stock)is worth paying more. On face value, in a run-up like we have now, the practical limit is just under the stock's price if the buyer thinks the stock will run well past $10 before the company can call it. Warrants are all a matter of how many shares I can reserve in my name for the lowest possible cash outlay to get the biggest share of the expected future capital gains. If people discover IFLY and believe this is a $33 stock as promoted and if it is going to get there fast, I agree we're going to see a big move with the warrants Monday and the warrants are very undervalued. Each investor's estimation of the risk/reward will determine the warrant price, not a formula. The current stock price sets the practical price limit, but it is the stock's future value estimates and timing that will sway the investors. So get everyone you know to buy the stock and keep it going up and up.