|Delivering warrant education to expand
THE KNOWLEDGE OF INVESTORS
Glossary of Terms
The act of sending your warrant to the company, paying the exercise price and then receiving new common shares of the company.
The price the company has determined for converting the warrants into common shares.
The exact date the company has determined for the warrants to expire in the future after which there will be no value.
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, 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 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
We like to define leverage as getting the maximum return with the least amount of your investment capital at risk.
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.
We advise ALWAYS use Limit Order for trading warrants and the small Canadian shares.
Our personal definition of a long-term warrant is one that has a remaining life until expiration of at least 2 years.
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
The market capitalization for any company is the total shares outstanding times the price of the common shares.
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.
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.
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.
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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