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Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Dan O. who wrote (4640)	4/17/1998 5:18:00 PM
From: bluejeans	Read Replies (1) \| Respond to of 9719

Dan, You raise a good point about the buying power (however, that will not help my last bull throw in towel theory)<G>. The selling of the common stock and purchase of the warrant will be recognized for tax purposes as they have a gain in the common. If they did not, then the wash sale rules would come into play. Of course, this is a mythical portfolio so maybe taxes are not an issue. Bob

To: Dan O. who wrote (4640)	4/18/1998 4:54:00 AM
From: Flagrante Delictu	Read Replies (1) \| Respond to of 9719

Vector 1, I agree with Dan O. except that you don't increase your risk, you decrease it. The wt. allows you to buy the stock at anytime until expiration on 6/3/00 at $7.12 from the co. The warrant currently trades at $6.12 under the stock. Therefore,if you buy it at that differential, you will lose $1.00 when you turn it in at expiration, because on that day the warrant will be worth $7.12 less than the stock. But, if you calculate your margin interest saving on $6.12 from now until expiration, it should equal that dollar. On the downside, the stock can lose 15.25 on a fall to zero, the wt. can only lose the $9.125 you pay for it. If you want out before expiration, merely short the stock vs. the warrant, cover it whenever you want, & do it as often as you want . The wt. is a full hedge vs. the stock. Check it out.