RE:RE:Warrants At A DiscountWell G, its very simple to understand the calculation under the proposed structure. You take the price of the shares in the u.s. say .88 minus the proposed strike of .50 u.s. and you divide by 10. That number must then be converted in cdn dollars. So based on yesterdays close, the base bid value is .038 u.s. or about 0.042 in cdn market.
To that price you have to add a premium based on time value (2 years) and the volatility of the underlying shares, which in this case could easily be 10% or more on any given trading day, the higher the volitility, the higher the premium. That premium is based on a complicated mathematical formula. In conclusion, to make things very easy, I like to see if we are undervalued based on the basic conversion and then assume that a premium is a bonus which further justifies the case. Warrants are a great tool but are NOT for everyone and should only be traded by experienced investors.