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Posted: 26/Oct/2006 at 1:51pm
The downside is the same with the Trent stock if the stock tanks after 3 years the warrants will expire worthless. just that the downside in absolute value is limited.
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Joined: 09/Sep/2006
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Posted: 26/Oct/2006 at 2:07pm
Sir can you tell me if i have ourchased 100 trent Warrants at average price of 310. What will be loss or profit per unit share at the time of conversion assuming the price of Trent remains same at 800 on conservative basis. It would be of great help if you could expalin with this assumption.
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Posted: 26/Oct/2006 at 2:12pm
At an average price of Rs 310 your warrant would be converted into stock at Rs 650 so the total outgo is Rs 650+Rs310 = Rs 960 and if Trent trades at Rs 800 in 2010 you would incure a loss of Rs 160 per share plus the opportunity cost of having the capital tied up.
I would think that Trent shuld be more then double the current price in 2010.
Edited by basant - 26/Oct/2006 at 2:13pm
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
Joined: 09/Sep/2006
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Posted: 26/Oct/2006 at 2:18pm
but sir in one of ur message u have quoted that in case of warrants the loss is minmal but in the above case a loss of Rs 160 per share is a big loss plus we also lose the time value of money. So is ther any way the shreholder of warrants are protected in buying these warrants.
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Posted: 26/Oct/2006 at 4:29pm
Yes downside absolute loss is minimum you lose only Rs 300 in case of warrants if the company closes down in case of a stock you lose full Rs 800. - No way to protect against this loss except to first see where Trent would be after 3 years. That call is more important to take and if one is satisfied with that at first then he should buy warrants.
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
Joined: 09/Sep/2006
Location: India
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Posts: 27
Posted: 26/Oct/2006 at 6:26pm
Sir what is the procedure if anyone at the end of period wants to get the warrants converted into equity is it same like rights i.e. you pay the margin money and get it converted? Also, if you could clarify that is one warrant of Trent at the time of conversion will be eligible for 1 equity share or something else. Thanks in advance
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Posted: 26/Oct/2006 at 6:59pm
Same as rights company gives letter at time of conversion and it is 1:1 in this case and no procedure for additional application as in rights.
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