Post by
bestiole on Jan 08, 2021 11:50am
CVE.WT-C Price
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 $1,90 ?
Comment by
Husky4000 on Jan 08, 2021 11:58am
This is called Time Value. Warrants are valid for 5 years, this is worth something...
Comment by
Dogsbreakfast4U on Jan 08, 2021 12:37pm
Because the market expect CVE to go much higher in price over the next 5 years.
Comment by
oilandgasmick on Jan 08, 2021 12:39pm
If I remember correctly from my options course in my college days, the extra value is called the "intrinsic" value. It's what the market sees down the road and in this case the expiry date on the warrants is a long way off so its substantial.
Comment by
autofocus111 on Jan 08, 2021 2:22pm
oil&gas Intrinsic value is the 'in-the-money' price component. The 'extra value' aka extrinsic value is the premium attributed to a warrant/option over and above the instrinsic value, and represents value of the time and volatility component.
Comment by
oilandgasmick on Jan 08, 2021 2:34pm
Yes, you are right. Intrinsic value is the definition you provided.
Comment by
bestiole on Jan 08, 2021 1:39pm
Thanks for your answers. The gap is quite big!
Comment by
Husky4000 on Jan 08, 2021 1:45pm
I personally think the warrants are cheap. If stock trades at 10.54$ in a year, 100% of the warrant will be 'in the money', with 4 years to go...