Nov 30, 2010

Consider Warrants as a leverage asset to your portfolio.

Warrants are a great way to get leverage to the price of an underlying company without some of the risks that call options have. One is the time factor as many warrants, several which I will list below go out 2,3,4,5,6 years whereas options may have a 2 year leap contract. But these contracts has a severe flaw, that is the price is based on volatility while assuming a normal probability distribution, which is not the case in reality. You have to go through tedious equations and make what is referred to as volatility smiles. Whereas warrants don;t make any assumption, rather the buyer makes the assumption to determine how much leverage it has. (E-mail me for the spreadsheet The following are some of my favorite warrants:

  1. New Gold - NGD.WT.B (Strike: $15.00 , Warrant Price: $2.98, Expiration: June 28th, 2017
  2. Sandstorm - SSL.WT (Strike: .62 , Warrant Price : .34 , Expiration: April 14th, 2014
  3. Argonaut - AR.WT ( Strike: $4.50 , Warrant Price:$ 1.15 , Expiration: December 29th, 2012
  4. MineFinders - MFL.WT (Strike: $5.00 , Warrant Price: $5.28 , Expiration: Dec 31st, 2011
  5. Dundee Precious Metals - DPM.WT ( Strike: $3.25, Warrant Price: $5.70, Expiration: Nov 20th, 2015
  6. Minera Andes:- MAI.WT (Strike: $1.25, Warrant Price: $1.16, Expiration: August 19th, 2014

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