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Delivering
warrant education to expand
THE
KNOWLEDGE OF INVESTORS
Glossary of Terms
Exercise
The act of
sending your warrant to the company, paying the exercise price and then receiving new
common shares of the company.
Exercise price
The
price the company has determined for converting the warrants into common shares.
Expiration date
The
exact date the company has determined for the warrants to expire in the future
after which there will be no value.
Liquidity
The
absence of sufficient trading volume to execute your trades, and/or a large spread
between the bid and ask prices.
In the money
See Intrinsic value
Intrinsic value
Intrinsic Value,
frequently referred to as "in the money" is the difference between
the current price of the common stock less the exercise price of the
warrant. If say, the common stock of a company is $10 and the
exercise price of the warrant is $8, the warrant is actually worth
$2 and is said to have "intrinsic value" or is "in the money" by
$2. We provide you with
the intrinsic value of each warrant
with updates each Friday. You only need
to login to get your updated list.
LEAPS
LEAPS which stands
for Long Term Equity Anticipation Securities is also an option as
defined above but these have a longer life of perhaps up to 2
½ years. Yes, this gives you much more time but there
are currently very few LEAPS trading on the mining
stocks.
Options and LEAPS
are actually created or written by investors or companies who write
an option and keep the premium (the amount
you paid) as income. The underlying company receives nothing.
For more information on options or LEAPS, visit
www.cboe.com
Leverage
We like to define leverage as getting the maximum return with the
least amount of
your investment capital at risk.
Leverage Indicator
The leverage indicator is simply
the price of the common share divided by the price of the
warrant. Please see out comments and use of the leverage
indicator in the section:
Our Warrant Database and How To Use It
Limit order
If buying: you are committing to pay no more than a specific
price per share to
execute your order.
If selling:
you are requesting to receive no less than a specific price per share/per
warrant on your trade.
ALWAYS use Limit Order for trading warrants
and the small Canadian shares.
Long-term warrant
Our personal definition of a long-term warrant is one that has a remaining life
until expiration of at least 2 years.
Market order
You are agreeing to pay whatever the current market price is and
if selling you
are agreeing to accept the current market. A market order is
NEVER advisable for trades in the small Canadian shares or in the warrants. ALWAYS use Limit Orders
Market capitalization
The market
capitalization for any company is the total shares outstanding times
the price of the common shares.
Options
A call option is a contract that
gives its owner the right, but not the obligation, to buy a specified number of
shares at a predetermined price within a set period of time. Most options have a life
of 90 days, 180 days or
perhaps up to 1 year.
For more information on options or LEAPS, visit
www.cboe.com
Out of the money
When the
price of the common share is trading below the exercise price of the
warrant.
Theoretical Value
This is
basically the 'intrinsic value' (see above) of the warrant. If the price of the
common stock is below the exercise price of the warrant, there is no
theoretical value.
USD - United States Dollar Index
This USD
Dollar Index is computed using a trade-weighed geometric average of
six currencies -
for the
details click here.
Warrant
A warrant is a security (like a
option) giving the holder the right, but not the obligation, to purchase the underlying stock at a
specific price, within a specified time period.
Worthless
A warrant, like an call option or a LEAP, can be
totally worthless upon expiration if the common shares are trading below
the exercise price.
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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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