So I will put forward some of my logic to see if you agree.
CBAWGN is a $26.50 warrant expiring on 4 of march 2003. Last traded at 28cents 5 warrants are required to purchase one share making the total price 28c x 5 + $26.50 or $27.90. A slight premium to today’s close.
I have set up an excel spreadsheet to calculate what I believe is fair value at any given price.
If hypothetically CBA closes on the expiry date at $30 then CBAWGN should be worth approximately 70 cents.
Hypothetical CBA price at expiry $30 less warrant exercise price $26.50 is $3.50 divided by 5 equals 70 cents. If I refer to comments you made earlier would I be correct in assuming that you believe that as CBA is 45 days to dividend payment that this payment should be deduced from the prospective closing price at expiry before the going X-Div.
$30.00 less 68cents less exercise value $26.50 equals $2.82 divided by 5 equals 56 cents. Once the stock goes ex you remove the dividend figure and revert to my previous calculation.
This is surmising that CBA will fall by 68 cents that day after going ex.
Do you consider this Fuzzy or does the logic have merit.
