Forum Archive Index - June 2000

["James S." <jsmalley@globe.net.nz>]

Hi sharechat readers,

 

I've read all the previous sharechat posting about warrants but I still can't work this one out.

FEGSB 29/11/00 $5.50 2:1 warrants currently closed at .64 (21/06) with a underlying share price of $6.09.  Now assuming it takes two warrants at excise time to get a FEG share this implies a value of $6.78 ($5.50 + (2 x .64)).  I realise that the difference in the implied price and the actual FEG price is the 'time' effect that a derivative like a warrant allows.

 

But what about TELSB 29/03/01 $4.75 2:1 warrants?  Their current price (21/06) is .19 and the Telecom underlying share price is $7.50.  Thus using the above logic the implied price is $5.13 ($4.75 + (2x.19)).  Obviously that can't be right!

 

I would appreciate any help in explaining this to me.

 

Thanks in advance

 

James