Samco Gold Ltd V.SGA.H

RE: Profit potential warrant vs stock

[Goldbuggy2]

You said that: If the stock doubles to $2.30 the warrants will move up to $0.59 ($2.30 - $1.71 = $0.59). So my question to you is stargazer1, where is the premium in your calculation, which all warrants have? Look at it this way stargazer1. The stock is trading now at $1.15 per share. The exercise price of these warrants is $1.71. So by your own theory, and calculations, the warrants should now be worth, and trading at, $1.15 - $1.71 = -$0.56. Since money cannot go to a negative number, except when you borrow it, then the next closest price for these warrants, at our present stock price, should be "ZERO". But they are not trading at ZERO stargazer1! In fact the warrants are presently trading at $0.34, and this is because they always trade at a "Premium". In this case -$0.56 - $0.34 = $0.80. So if this stock doubled tomorrow, and adding in this $0.80 premium we have now, the warrants should be worth $0.80 + $0.56 = $1.36. From your original buy of $0.34 that is a 400% profit, and although the stock holder doubled his money, you 4 bagged yours, with these warrants. GB