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Delivering
warrant education to expand
THE
KNOWLEDGE OF INVESTORS
Defining Over Valued, Fair Value and Under Valued
Our
Baker-Wilson L/T Formula in which we Rank All Warrants
basically replaces our previous warrant valuations.
For more info.
That said, our Ranking of Warrants
takes into consideration our warrant leverage calculations and
thus our previous warrant valuations.
Our leverage calculations on each
warrant are still available for subscribers and are included on
our warrant database via the hyperlink under the column for
Warrant Leverage.
We
determine current warrant leverage valuations as follows:
After
updating all prices and calculations, we review the leverage
calculations on all of the warrants. We are looking at
many factors, including the bottom-line leverage and the
remaining life of the warrant.
Basically:
UnderValued = a current leverage of 1:7 to 1 or higher
FairValued = a current leverage of
1:1 to 1:6 to 1
OverValued = a current leverage of less than 1:1
to 1
and/or a very short remaining life
Also,
remember, the valuations will change as the price of the common
shares and the warrants fluctuate. In fact, it is possible
for the rating to get a better as the price of the common shares
and warrants increase and the warrants to be a 'better buy' even
though at a higher price due to the relationship of the prices
of each. We realize you may be surprised that one warrant
at C$.85 is perhaps a 'better value' than when the warrant was
selling for C$.45.
Current Fair Value of a
Warrant
vs. Where is the
Warrant Going
Some readers may be familiar with the Black-Scholes formula for
valuing options. This formula takes into consideration,
the current price of the common shares, the exercise price of
the options or warrants, the remaining life, a volatility factor
and an assumed interest rate. This formula can also be applied
to valuing warrants but we have chosen not to use this
methodology. Why? We believe that if subscribers use our
RANKINGS of All Warrants, this will give you in our most
conservative column (100% Ranking) all warrants which we feel
are UnderValued.
We strongly
believe in the long-term bull market in the commodity and
natural resource sector and thus we are more interested in, 'Where
is the Warrant Going?'
which we
stress in our calculations.
Frankly, the
market price, is just that the market price. If a warrant is
currently selling for a few pennies more than it's fair value as
determined by Black-Scholes, investors may decide not to buy
that warrant. But what if the markets are ready to explode
upwards and you never get an opportunity to buy the warrant at
what you believe is fair value?
Thus, we may
personally pay a few pennies more for a warrant because of our
strong believe in the company and where we see the price of the
warrant going in the future.
We are
all about making money and will present you with the
best information available to assist with your decision making
process.
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Disclosure/Disclaimer Statement
PreciousMetalsWarrants.com is not an investment advisor and any reference to specific securities does not constitute a recommendation thereof. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.
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