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SN3165 (< 20)

Picked Up Some Primero Warrants Today at .39

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November 02, 2011 – Comments (11) | RELATED TICKERS: PPP , GPL , EXK

Seems like a great deal to me, given the stock was back over $3 today and the warrants have dropped from .50. They expire in late 2015 with a strike of $8 !

Also considering that when the stock was at $2.80, the warrants were at .43 cents and labeled "undervalued" fair price value of .65 cents (bargain), according to preciousmetalswarrants.com.

 Read up on some of my previous posts for more info. on warrants. 

11 Comments – Post Your Own

#1) On November 02, 2011 at 3:39 PM, SN3165 (< 20) wrote:

I am long both common stock PPP and warrants (MNCWF for US Investors)

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#2) On November 02, 2011 at 3:49 PM, SN3165 (< 20) wrote:

sorry I gave the wrong link in the body - that's according to canadianwarrants.com

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#3) On November 02, 2011 at 5:49 PM, Mega (99.96) wrote:

Is this a trade or are you planning to hold for 4 years?

You realize that your position will be worth $0 if PPP ends up $8 or less, right?  Way out of the money warrants are never cheap, unless you assume that the underlying common stock will be a spectacular investment.

Are you sure you need leverage, and this is the cheapest way to get it?  I don't know if PPP satisfies the option listing requirements (it's not currently optionable), but you can request it here: http://www.cboe.com/AboutCBOE/ContactCBOEADV.aspx  If it becomes optionable, then closer to the money LEAPs might make more sense.

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#4) On November 02, 2011 at 9:05 PM, SN3165 (< 20) wrote:

"You realize that your position will be worth $0 if PPP ends up $8 or less, right?  "

False. You can buy and warrants like you would a common stock, even if they are below thatnumber. I actually bought some a while back at 60 cents and sold for a small loss a month later (needed the money..). 

No reason to ever exercise, either. 

" a United States citizen cannot exercise the Canadian warrant. If he exercised the warrant, he would receive a newly issued share and unless those shares have been registered with the SEC he cannot legally purchase them."

 

"When the warrant has met your financial objective, you just sell the warrant as you would the common stock.  You can sell the warrants anytime you want and do not have to hold to the expiration date (as a few investors erroneously believe). " Preciousmetalswarrants.com

 Read up

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#5) On November 02, 2011 at 10:19 PM, shamapant (82.92) wrote:

Thats true and I respect your style, im thinking about getting into warrants myself. Things to think about though:

 1)Megashort was right about one thing, out of the money warrants are generally speaking very overpriced.

2) While warrants don't expire worthless if you sell them early...you have to sell them for a loss...which sucks.

 3) OTM warrants will show time decay and even if price goes up you might see value of the warrant go down if the price doesn't rise enough...given, 5 yrs is a while so wel c, and I haven't even looked into the specific stock yet-just some general thoughts 

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#6) On November 02, 2011 at 11:05 PM, SN3165 (< 20) wrote:

1) Depends which ones, but the Primero warrants are way undervalued. There is a big discrepancy in the common stock price and the warrants.I warrants I trade are all undervalued in my opinion.Take also, for instance, the '17 New Gold wts, '14 Sandstorm gold, kinross '14... all good bets. 

2) That's not true. If Primero only goes up, say to $4 a share by 2013... the warrants would be worth more than the measly .39 cents they are now. 

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#7) On November 03, 2011 at 11:11 AM, Mega (99.96) wrote:

By "ends up $8 or less", I meant "ends up $8 or less in late 2015".  I know warrants can be traded, that's why I asked you what your time frame was for the trade.

"2) That's not true. If Primero only goes up, say to $4 a share by 2013... the warrants would be worth more than the measly .39 cents they are now. "

The underlying needs to go up 174% for you to break even, which means 29% per year.  If it goes up less than that, the warrant will likely be worth less.

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#8) On November 03, 2011 at 12:28 PM, SN3165 (< 20) wrote:

Yeah, you have to sell it before they expire. They are not options. So my timleline would be to sell it anytime between 2013-2015. 

2)  I don't think that's correct..

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#9) On November 03, 2011 at 12:50 PM, Jbay76 (< 20) wrote:

It seems to me that if you are long a company, its just simpler to get shares of the compnay when the price hits your target...Given that there seems to be confusion about how warrants work, I'm gonna take the simpler road to gains

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#10) On November 03, 2011 at 1:16 PM, SN3165 (< 20) wrote:

JBay I agree, there is a lot of confusion on them but you should at least read up, I have written about them in past posts and provided useful links.  If you're long sandstorm gold, for instance, why not split you position up and go long the warrants too? Sandstorm gold's expire in late '14 and provide rougly 2x the leverage the stock does, and the stock doesn't yield a dividend.

Go back and look at the First Majestic (AG) stock chart for the past 3 years. Then take a look at their warrants.You buy the warrants, then you sell them, just like a stock, when they are higher. Just remember to sell before they hit the exp. date. The biggest drawback is that They are thinly traded, but I can tell you that I've traded them actively over the past year and had little problem. 

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#11) On November 03, 2011 at 5:01 PM, SN3165 (< 20) wrote:

@Jbay also it really depends on your situation I guess, personally I am young and willing to take risks so It doesn't bother me none. You may a person nearing retirement for example. So warrants certainly aren't for everyone. But if you really believe in this PM bull market we are in, and really like a company (like Primero) it's worth a close look!

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