Cenovus Energy Inc T.CVE

CVE.WT-C Price

[bestiole]

The warrant price is $3,90
The share price is $8,44

The strike price for the warrant is $6,54 

So the warrant price should be $8,44 - $6,54 = $1,90

Why the difference between $3,90 and $1,90 ?

[Husky4000]

This is called Time Value.  Warrants are valid for 5 years, this is worth something...

[Dogsbreakfast4U]

Because the market expect CVE to go much higher in price over the next 5 years.

[oilandgasmick]

If I remember correctly from my options course in my college days, the extra value is called the "intrinsic" value. It's what the market sees down the road and in this case the expiry date on the warrants is a long way off so its substantial.

[autofocus111]

oil&gas Intrinsic value is the 'in-the-money' price component. The 'extra value' aka extrinsic value is the premium attributed to a warrant/option over and above the instrinsic value, and represents value of the time and volatility component.

[oilandgasmick]

Yes, you are right. Intrinsic value is the definition you provided.

[bestiole]

Thanks for your answers. The gap is quite big!

[Husky4000]

I personally think the warrants are cheap.  If stock trades at 10.54$ in a year,  100% of the warrant will be 'in the money', with 4 years to go...