MREWMC has an exercise price of $2(you pay $2 per share).
The conversion ratio is 3 to 1(you need 3 warrants to buy 1 share).
Exercise date is 26-may-2005.
Currently buy side for MREWMC is 9 cents($2.27) & sell side is 9.5 cents($2.285).
MRE trades for $2.15(buy side) $2.16 sell side.
Why pay more for Call Warrants?
Ok,
Say on the 25th of May 2005 MRE was trading at $3.
Warrant holders can still buy the shares for $2(3 warrants for 1 share) that means the warrants would be worth 33.3cents each(with no time bonus) a profit of over 300% from current prices.
The people who bought the shares at $2.15 would only be making a ~40% profit.
BUT, if on the 25th of May 2005 the shares were $2 shareholders would be sitting on a ~5% loss while Call Warrant holders would be sitting on a ~99% loss.
If MRE rose to $4 on the 26th of May & doubled their money in a day MREWMC holders who bought in at the prices specified would still be ~99% out of pocket.
I think the numbers & the theory are about right but I am drunk so no promises from me.
Cheers.
MRE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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