Catalyst Pharmaceutical Partners (CPRX)

[bellweather1]

And I suppose you believe that 10% is the appropriate volatility to use for CPRX?

Though there is no implied volatility for CPRX because no options are currently available, the historical volatility is 79.7%, vs Ariad's which is 65.3%.

Therefore, it's clear that if there were CPRX options, the implied vol would be higher than Ariad's(I really only used the same vol estimate for both to give your calculation the benefit of the doubt).

Therefore, it's also obvious that any kind of rational estimate of CPRX's Black Scholes warrant value would require the use of a higher Volatility value than Ariad's, leading to a higher call price estimate.

For example, if you used 70%, the result is $.75, or 75%(probably closer), the result would be $.78.

Picking 10% vol out of the air(since it bears no relation to the stock's volatility) is what's really flawed.

What's also really flawed is your apparent inability to fairly entertain and consider different viewpoints.

Like you said:

...basically garbage in, garbage out.