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

To: Machaon who wrote (24036)	8/5/1998 10:42:00 PM
From: sdkaye	Read Replies (1) \| Respond to of 32384

This idea of the warrants becoming more attractive than the stock begins to get much clearer in my view with the warrants trading at about 4.00. I cannot remember all the "derivatives model" analysis that Russian Bear, Bernie (where is he?)and others were talking about several months ago. However, I have two thoughts. The first is that the essence of Bernie's concept of risk was upside versus downside. At a level of 4, you effectively have a LEAP that expires in two years on Ligand stock at what appears to be an attractive level - if you believe LGND is worth buying. This seems to me to be more important at this point than the borrowing costs etc. I am sure the ?-Scholes model has this all figured out. However, if you figure the volatility of the stock (admittedly one-directional at the current time - and the wrong one) and the current price, then I think that you have an underpriced warrant. What do the experts like RB think? Maximum exposure 4.125 per share on the downside. Interest at 10% for two years and 7.125 for the Ligand stock and you have the option to buy LGND in two years for about 12. It can sure give you all the leverage on the upside. All goes down to the level of risk that you want in a portfolio - key - not a single stock strategy. That's gambling! Thoughts?