I've just been considering trading Instalment Warrants and can't make sense of a few things.
I've read through the classes on the ASX site but still don't quite understand some of the available warrants, hope I can get some help.
1) I've seen some with an instalment price that is greater than the current share price.
To quote a smarter man than I... Why is it so?
Then there's others with very high strike prices, or both, why would someone invest in to either of those?
All of the examples given in the ASX tutorials express the Instalment + Final payments to be nearly equal to the share price.
Fine in theory, but in practice it doesn't seem to match up with warrants on offer.
ASX Code: RIOJMG
Strike Price: $83.99
Expiry Date: 30/06/2010
Ex Style: A
Issuer: MACQUARIE BANK LTD.
Conversion Ratio: 1W = 1 Share
Issue Size: 10M
Last Price: $79.100
First Traded: 07/02/2008
On the ASX site this is given a valuation of $52.670, so it appears to be on offer just a bit higher...
RIO's last close was $43.930.
2) Is there anywhere that lists all of the stocks that have warrants available?
3) When selling the warrant are you guaranteed a sale if you meet the current ask price?
I'm assuming that the issuer is required to buy the warrant to meet their conditions of 'making a market', correct?
4) Is there anywhere that shows some practical examples of how some of the less obvious factors effect warrant pricing, e.g. 'time value'?
Thanks in advance