RE:RE:RE:RE:The Wallzzzzzzzzzz ........ will ...... FallzzzzzzzzzzzWhen the warrants get near to their expirey date then the "intrinsic" value is increasingly an issue vs their extrinsic value (outside value or 'time value')
It acts like an option.
By way of analogy let's imagine you sell a right to buy your house to your neighbor. You tell your neighbor "give me $50,000 today and you can buy my house any time over the next one year for $1 million dollars. Today your house is only sellable for $900k so you say yes and take the $50,000. Your neighbor is betting that a zoning upgrade will be pushed through so that within a year the property jumps from $900k to $2 million dollars.
If that does not happen you kepp the $50k and the neighbour loses $50k... It's a bet, it's a speculation, or some see it as an investment but nonetheless if the rezoning occurs then the neighbour has the 'warranted' option to give you $1 million for your house even though it is now worth $2 million. You cannot back out because you sold the option (warrant) to your neighbor.
The less time that remains for the option to end up 'in the money, ' the rezoning in this example, the lower the value of the option.
The A warrants are for a 22 cent but but have 6 months more time value than the older series which are for a 20 cent buy option..
I hope this helps.
Cheers,
Notgnu
ozkan123 wrote: Notgnu, got a question about the warrants.
Being a bit of a novice with warrants, trying to get my head around the pricing, and hopefully you can provide some guidance on the understanding.
Today the warrant jumped up to 0.055
Share price is at 0.205
Exercise price is at 0.22 per warrant, which if you exercise and converted to common shares today would mean you're owning share worth 0.205 and it's cost you 0.275/share
I always thought that warrant price + exercise price usually was at or below actual share price.
Am i missing something?
Thanks in advance
OZ