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RED EAGLE EXPLORATION LIMITED V.XR

"Red Eagle Exploration Ltd is engaged in the exploration, development and permitting of mineral properties. It owns the California Gold, Vetas Gold and Santa Ana Silver projects."


TSXV:XR - Post by User

Comment by redfoxon Jan 20, 2006 6:29pm
417 Views
Post# 10217651

RE: Still room to go here

RE: Still room to go herego to the same site and simplify things by treating the warrant the same as an option. The results are more obvious (and what is used to value options) and it calculates the time adjusted value of the warrants, not the other way around. All of these models rely on getting the right information into them - especially the degree of volatility that you assign to the share value. The warrant value is a derivative of the share value. Bottom line if you believe that gold will continue to stay at these levels, then CBJ will go up. Look at an example: If I had $10,000 to invest I could buy 3,000 shares of CBJ or 10,000 warrants. If the shares rise 30% (ie., about a dollar), then 3,000 shares equals 12,000-10,000=$2000 gain warrants should trade at 60% of the gain ie., trade at $1.60 10,000 warrants = $16,000-10,000= $6,000 gain If on the other hand you think that not going anywhere then hold the stock or short the stock, but cover it with warrants that way if you predicted wrong your losses will be lmited to the cost of the warrants and the differential between what you shorted the shares at and the exercise price. Best wishes to all
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