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Calls and Puts

Calls and Puts A call option is an option to purchase a specified number of shares on before a specified future date at stated strike price. The striking price is the price at which the holder of the option can buy the shares at any time prior to the expiration date...

OPTIONS

OPTIONS Option is a derivative security and derives its value from an underlying security asset. An option an instrument that provides to its holders an opportunity to purchase sell a specified security at a stated price on before a specified expiration date. The...

Market Value of Warrant (MVW)

Market Value of Warrant (MVW) The MVW is generally more than the TVW. The two values are only when (i) the TVW is very high or (ii) the warrant is near its expiration date. The maximum excess of MVW over the TVW generally is when the market pnce of shares is close to...

Value of Warrants

Value of Warrants Like convertible bonds, a warrant has a (i) market value and (ii) and a theoretical value. The difference between them is known as the warrant premium. Theoretical Value of Warrant (TVW) The theoretical value of a warrant is the amount for which the...

Implied Price of an Attached Warrant

Implied Price of an Attached Warrant The implied price or a warrant is the price effectively paid for each warrant attached to a bond. It can he computed using Equation 20A. Implied price of all warrants = Price of bond with warrants attached [vfb id=1]

Types

Types Warrants can be (i) detachable, and (ii) non-detachable. A detachable warrant can be sold separately in the sense that the holder can continue to retain the instrument to which the warrant was tied and at the same time sell it to take advantage of price...