<<< Still, why are they still worth something ? Why was the bid recently as high as .12 on them and the ask .18 ? >>>
Something is worth what someone is willing to pay for it. There must have been someone willing to pay .12 cents.
They still trade and will trade until expiring worthless next year. If they were truly worth something, a wise investor would short shares, buy warrants and exercise them. And walk away with the profit.
The warrants would disappear from existence, since the arbitrage opportunity would be gone.
<Why would MMs be offering 5 cents for something worthless ?>
Time value. There is no intrinsic value (not until KKD gets above $50.48) but because the warrants last until June 07 they do have time value.
Basically, the MM is offering 5 cents for time. And hope.
<Each warrant represents the right to buy 15% of one share of KKD @ 7.58>
You are not correct. The $7.58 strike refers to the price each warrent allows you to pay for a share of MMX, not KKD.
"...each outstanding share of Montana Mills' common stock was converted into the right to receive 0.1501 shares (the "Exchange Ratio") of Krispy Kreme common stock."
So each MMX share equals 0.1501 KKD. Or, inversely, each KKD share equals 6.66 MMX shares.
The warrant strike of $7.58 refers to the price for which you can buy a share of MMX.
So each warrant allows you to pay $7.58 x 6.66 = $50.48 for each KKD.
Still not convinced? Look at the January 2007 KKD $7.50 call options. Yahoo currently shows bid $1.80 ask $1.90. So the market price to buy a share of KKD by January is $1.90, plus the $7.50 strike for a per share cost of $9.40.
But according to your math, your cost per share is 8.18 per KKD. Doesn't that seem odd to you? Especially because your warrants go six months longer....and the January 2008 $7.50 calls are asking $2.75, total all in per share of $10.25. How can you explain this huge market imbalance?
Why wouldn't you buy as many warrants as you can, and sell as many call options as you can, and make (7.50 + 1.80) - 8.18 = $1.12 per share? You just invented a massive money machine!
Or your math is wrong.
hah, so you admit that I was right. Now you're resorting to conversion expenses. Glad that's settled. The conversion expense will be minimal, under 100$. But when KKD hits even 9.50, you will see the warrants move to .30 and I will be up well over 100% then I can just sell the warrants I don't even need to convert. And KKD is only 75 cents away from that happening.
Glad you think I am admitting you're right. Doofus, I wasn't talking about the conversion costs just see if your broker wants $758.00 or $5048 (plus whatever fees) to convert 666 warrants to a hundred shares.
Given you've spent $6,000 to $10,000 dollars to accumulate these warrants don't you think this is something you should test out?
You can't add up your warrants like that. Each warrant stands alone.
1 warrant gives you the right to purchase 1/6.66 of a KKD share at $7.38. If you exersize 6.66 warrants you will turn over 6.66 times $7.38 per warrant which equals $50.38 and you will receive 1 KKD share. Your cost is $50.38 plus $0.10 per warrant or $0.66 for a total cost of $51.04 to receive a KKD share now worth about $8.60.
....you're talking to a crowd that will dispute the meaning of a red arrow or a green one.
Besides, KKD must fail or their parrallel universe will cease to exist.
This is only in small part about whether KKD will go up or down. It's about whether it requires 6.66 warrants plus 7.58 or 6.66 warrants plus $50.48 to get a share of KKD.
Now you are a savvy investor. Study up and tell us which it is $7.58 or $50.48. This is an open book test but it is a test.
...just ask di_vur_se_fi and look at his record.
Di Vur? Oh you mean the guy who shorted in the forties some years ago and posts from his retirement retreat in Bermuda that he bought with the profits.