After some google ing and readings from different source, my conclusion and understanding about warrants;
*Company Warrant (WA/WB.....)
is issued by the company and Convertable to mother share;
Formula:
Warrant Price x
Exercise Ratio +
Exercise Value =
The amount you spend to own the company share
Example:
Share Price : RM 0.56
Warrant Price : RM 0.11
Exercise Value : RM 0.54
Exercise Ratio : 1:1
RM0.11 x 1 + RM0.54 = RM0.65
You have paid RM0.65 to own a share that worth only RM0.56 at that current share price.
Means you have paid extra RM0.09 or 16% premium for owning the share.
Share Price 0.56 - Exercise Value 0.54 = 0.02/1.
At the current share price of RM0.56, the warrant is only worth RM0.02
*Call Warrant (C10/.....)
is issued by third party financial institution and Cash settled on expiry.
Cash is settled only if the share price is higher than the exercise price.
Formula:
(
5 days average of last Closing Price -
Exercise Price) x /
Exercise Ratio =
Amount of Cash Receive
Example:
Share Price : RM11.7
Call Warrant Price : RM0.6
Exercise Value : RM7.6
Exercise Ratio : 7:1
(RM11.7 - RM7.6) /7 = RM0.586
You have paid RM0.6/warrant, But you'll only receive RM0.586 in return when expired.
Please correct me if I'm wrong.
