Lucent Technologies Inc (Warrants) (fka LUTHW)

[gavinz1970]

Information from another board dated 3/01/2005:


Recently, Lucent issued 200 million warrants as part of shareholder class action lawsuit settlement.

Each warrant allows you to buy one share of lucent stock at $2.75 per share. The issue date for these warrants is 12/10/2004 and it is valid for three years. (Therefore, the warrant allows you to have the right to purchase Lucent stock until 12/10/2007.)

Hence the warrant is like "buy option" - it gives you the right to buy. And it is fairly long term - you have nearly three years to decide.Right now, these warrants are traded in OTC BB under the symbol LUTHW. With Lucent at $3.27 per share, LUTHW is traded at $1.18 per share. LUTHW has a $.52 value ($3.27-$2.75). Therefore you pay an extra $0.66 premium ($1.18-$0.52) for the purchase right. Therefore, there is a leverage factor of about 2.5. It means you control the lucent share using only 40% of the cost. The win or lose is magnified by 2.5 times. It is more risky but the reward is also greater.

For example, for Lucent to go up $1, LUTHW needs to go up $0.40 and you will have the same percentage gain!! In reality, when Lucent goes up $1, LUTHW will go up $1 as well. There is, of course, a downside risk. But for Lucent at around $3 range, the downside risk is minimized.

In my opinion, the premium of $0.66 is very, very low for a 3-year purchase right. LUTHW under $2 is a good buy. This is just for your information.

( THIS IS NOT MY OPINION I FOUND THIS INFORMATION ON THE WEB AND AM PASSING IT ALONG, PLEASE DO YOUR DD ON THIS ONE)
http://www.marketmillionaires.com/hot-micro-cap-stock-picks-under-1-00/1461-luthw.html