||WTS TO SUB FOR ORD
||EPS - Basic
||Market Cap (m)
Real-Time news about Planestn.Wts (London Stock Exchange): 0 recent articles
|dag1967: Reading the above, is this correct :
Buy 15,000 Warrants @ 0.08p = £12.00
Can 'swap' these for 1000 shares in December of each year for next 4 years if I pay £1,500 (£1.50 share).
Total cost (exc charges) = £1,512
Current PTG shares 13.75/14.5p
So an 82% compound rise each year for the next 4 years to break even?
Why not buy 1,000 PTG shares NOW for only £145 (ex charges).
I understand that if the company goes bust, you'd only lose £12.00 with the warrants as opposed to £145 with the actual shares, but basically your 'betting' at odds of 12/1 (£145/£12) that the share price will increase 10+ fold over the next 4 years.
Am I missing something ?
|lizzie ii: Diamond1, "Is it possible you could rename this thread "The warrants" and list the epic as PTG.".
Quite happy to do that .... but how? I can click the "Edit" on the opening message in this thread but that does not appear to give access to the EPIC or the thread title. So if you or anyone lets me know how I shall gladly oblige.
The warrant price? Even without any more movement in the share price, that is, if it merely opens on Monday at the Friday closing price, I think the warrants should open at a minimum of 2p mid price ..... as the market realises that the two prices are now out of line.|
|lizzie ii: Surely with the shares up over 0.5p today, the warrants up today only 0.1p are lagging behind ..... and will surely move up sharply in the near future.
At this rate ... given the increase in the share price ... the warrants will be "in the money" in the next week or two.|
|lizzie ii: With the movement in the share price, time for the warrants to push a bit higher as well?
Surely just a question of time before the shares reach the 10p striking price, and lots of time value left in these.|
|goggin: What a load of balls. warrants are a long term call, if at the date of expiry, the share is out of the money, i.e., less than 10p, the warrant will have no value, why would anyone buy a warrant at the time of expiry for say 2p to exercise at 10p, add the 2 together and you have paid 12p to buy a 10p stock, assuming the shares are trading at 10p. If the shares are less than 10p at the time to expiry, then the warrant is worthless.
Now if the share is trading at say 20p, then the warrant will be worth 10p, again 10p exercise + 10p warrant = to 20p - only at the time of expiry.
Prior to this time, then the warrant has 'time value' it could trade anywhere depending on where the market believes the underlying share price will go and the length of time to expiry.
Currently the warrants have only 'Time Value' as they are out of the money.|
|lizzie ii: Nice analysis Scrutable. Just a couple of comments. Firstly the time value. The warrants have nearly seven years life left but as the expiry date gets nearer, if the warrants are out of the money, the price would gradually reduce to nothing. If in the money the premium would do likewise.
Secondly, the warrant is of course a long-term call option. So as with all options, the most you can lose is the amount paid for the warrants. That is, your scenario ... when share price reaches 10p the warrants price will be about 4p. If you buy the warrants instead of the shares any loss is limited to 4p. If you buy the shares it is 10p, looking at the worse case scenario.
Or say that if the shares reach 10p then collapse again to say 5p, whilst the shares will have lost 5p in value, the warrants can't possibly lose that amount, indeed the loss is likely to be less than 4p per warrant.|
|scrutable: there is some confusion about warrants
The higher the share porice goes the lower will be the premium for the warrant because for every p increase say above 30p, the percentage rise in the price of the warrants converges on the price of the shares and there is less and less point in holding the warrants. This process is exaggerated the moment dividends are paid because they do NOT accrue to warrants.
The largest premium justified by warrants occurs at the 10p excercise price, because that is the moment of greatest gearing. At 10p, there would have to be a premium. Clearly the warrants would not be valueless. In fact IMO, from experience of holding several issues of warrants in the past, the premium will be around 4p. For each p that the share price subsequently rises the warrants will rise by ALMOST 1p. For example at share price =11p the basic value of the warrant is 1p; but because you would be able to buy a share which is potentially a 10 bagger by the time the underlying share price reaches 20p, then punters would bid the price up to a premium of say 3.9p giving the warrant a value of 4.9p.
Whilst the underlying share moves from 10p to 20p it increases by 100%. If the warrant also increases by 10p () ie from 4p to 14p the relative increase= 250%. This advantagein gearing declines continuously as the price rises. For example If the premium remained at 4p (which it doesn't - it declines as you will see)then as the share price rises from 20p to 30p it shows a 50% advance whilst the warrant moving from 14p -24p advances by 72%. Thus the advantage in holding the warrant has already fallen from 250% v 100% down to 72% v 50%.
Because the warrant rapidly loses its gearing difference, the premium punters will bid for them, reduces progressively.
In actual numbers the premium will crudely be at its maximum of say 4p for a share of 10p, but only 3p when the share reaches 20p, only 2p when the share reaches 40p, and say 1.5p when the share reaches 50p .
The fact that the premium will reduce as the share price rises explains why the premium is only 4p at share price 10p and not 5p or 6p.
If the premium is going to be only 4p at share price 10p, then a warrant price of 2p at share price 5p will be about equal. For a rise in share price from 5p to 10p the share price will double, and the warrant going from 2p to 4p will also double. The fact that you can have two and a half times as many warrants is then irrelevant. It is the percentage increase - equal in this case - which counts.
At 2p the warrants are no bargain. At 1.5p they are slightly so.
When the share price reaches 10p the warrants show no advantage at 4p.
In fact the comparison is less favourable to warrants. The spreads are horrendous, and nms can restrict you to very small deals at a bad moment in the market.
Of course you might do better than this scenario if too many people buy warrants without thinking this through, and you MAY be able to get them away overpriced. But don't count on it.|
|aldasoa: Daimond, I think we are at cross purposes here and this is where JDA's confusion arises. If at any time the share price is x then at that
time the warrants would be less than x. Otherwise you would get the same exposure to the performance of the company by owning the share at a lower price. It might be argued that the warrant price would be z = x - 10 + y where y includes a risk element to owning the shares relative to the warrants and the interest in putting up the 10p for the share. Of course when x is less than 10p, as of now, the risk element of owning the share could be high relative to holding the warrants --- hence my guess that people are prepared to hold the warrants more at the moment. Anyway, I recognise that the warrants could one day be worth more than 10p (or even 4p) and that is perhaps where the confusion has arisen. To quote your example, if the ordinaries double or so to 10p, the midmarket price of the warrants could barely go up a factor of 6 (let alone 8) as this would put them at 9p.|
I'm sorry but you obviously have little experience of trading warrants. Warrants can and often do trade above the underlying share price. Let me try to explain.
The following scenario is unlikely but it serves as an example of the gearing of warrants.
If the ordinay shares reached 10p within the next six months, then you would have to expect that if the company traded profitably the share price would be considerably higher seven years down the road. Knowing that even if the ordinary shares reached £10 you could trade the warrants in for ordinary shares for only 10p makes the warrants worth considerably more than that. Therefore, if the ordinaries double to 10p then the warrants would likely go up six or eight times their current value. Plus of course if you buy the warrants now you would get 2.5 warrants for the cost of the ordinary shares. Conversely you could put up less than half the money and change the warrants for ordinary shares at later date.
Hope that helps to explain the value of warrants
Planestn.Wts share price data is direct from the London Stock Exchange