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North American Palladium Ltd. Message Board

  • raspcgs70 raspcgs70 Feb 7, 2008 3:23 PM Flag

    Buy PAL warrants or the stock?

    I would be interested to here the pros and cons of buying
    the warrants - Dec of 09 @ $5.05 strike verses the shares.
    Any help with this would be greatly appreciated!

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    • Thanks to all for the great feedback!
      I bought a combination of each.

      Robert

    • Time Value is the PRO

      • 1 Reply to dimensionalanalysisman
      • warrants are expensive here, but the leverage is excellent assuming the stock takes off near term --you are paying for the time premium at this point- two years is a long time--assume you buy the stock at 5 and it goes to 15 the warrant will have to take at least at $9.95- currently the warrants are 1.68 you get a 200% move with the common but a 492% move with the warrants-- risk the common does not perform and sit here for 2 year and you get zero - you lose everything!
        the metal is going higher--i would buy the warrants and actaully i would sell the common and buy the warrants and get even more leverage-- if you have balls like me!!

    • Rasp -
      That is a legitimate question, and the answer is not exactly simple.
      First, where do YOU think the stk. price is going? And do NOT listen to the 'cheerleaders' or 'bashers' unless they have some valid info to offer.
      Then secondly, what is your goal? Do you want to own the stk. (for long term hold & possible profits - or short term profits)?
      I think if you want max. profits in a shorter term, the warrants would offer that. ("assuming" the stk. price is going up) However, if the stk. goes down, your loss risk is greater with warrants. So, you have to decide....
      As a somewhat simple example, let's say you want to invest $5,000. You could buy 100 shrs. of the stock. Or you could buy 3000 warrants (at 1.60?). Then, if the stk. goes to $7. you have a $2000, profit in the stk. or 40%. The warrants would 'probably' go to $3. or more - thus a $4000. profit, or 80%.
      On the other hand, if the stk. goes down you stand to lose more with the warrants than owning the stock.
      So, the answer is not that simple...it really depends on YOU & your investing goal.
      Good luck with whatever you decide.
      Jim

    • Warrants are expensive right now. as if there are aspirations for a takeoff to 7. I would wait for next dip if you believe in the pal rocket and load up ontop of a core pal stock position. i have some warrants at .88 and .98 from 3 weeks ago. i would def say to buy 1.40 and below on next dip

 
PAL
0.155+0.0249(+19.14%)Dec 19 4:02 PMEST

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