RE:RE:RE:RE:RE:Let's Talk About Q2The Black-Scholes model is widely recognized as the authoritative method for determining fair value of an option (put, call, warrant etc). It uses in its calculations Risk Free Interest Rate, Current Stock Price, Strike Price, Time to Expiry and Volatility. Volatility has a dramatic impact on the underlying value calculated.
There are two types of Volatility, which are Implied and Historical. I used an online calculator to determine Aris.TO Historical Volatility for 2024. The result was 40%. Implied Volatility is using the Black-Scholes model to put in Option or Warrant market determined prices to calculate the Volatility.
Assuming ARIS.TO would have closed today at C$5.86 (using ARMN close), I calculated the Historical Volatility (40%) fair value of C$0.67 per warrant. The Warrants are trading with an Implied Volatility of 25%. This means at 5.86, the Warrants current fair value is C$0.50.
I would consider paying less than the Historical Volatility calculates, a bargin. Once volume picks up in the A series warrants, the Implied Volatility should begin to converge on the Historical Volatility.
Here's an interesting fact as I have owned Aris A series warrants for almost two years. The warrants before the share price explosion began in early March, the market determined price was highly correlated to 40% Volatility.
For those who want a copy of my Black-Scholes Excel model, just drop me an email at thansen509@gmail.com. It will allow you to determine fair value of warranst, calls and puts.