Replies to post #14762 on uWink Inc. (UWKI)

[SOKAL6]

This argument doesn't make any sense to me. If they are being allowed to buy at a discount (i.e. 2/sh vs 2.50/sh) they are getting .5/share upside in ADDITION to the upside of out-of-money options that have a time premium associated with them.

I'll run a Black-Scholes-Merton European call option model if I get time later(Europeans are not exercisable until a specific date) to get the exact price (of course std. deviation I'll have to imply. I think .8 would be fair). For arguments sake I'll stick my thumb in the wind and value them at .30 cents. That means they are getting .80 better than market.

Their options would have nothing to do with selling at close or impacting the market price. The options are a "right to buy."

What you are talking about are written call options, which these are not.

Please let me know if I am not understanding something.

[at_the_track]

bigguy: The conversion and sale of a warrant in the future impacts the then marketprice more than a sale of a share would. The warrant was held in treasury as an AUTHORIZED share. The shares that are bought outright in the new issuance become part of the OUTSTANDING shares. That dilution would becoome immediate at time of issuance. If/when the warrants are exercised, they will become outstanding shares, and therefore dilute the price. Period. Granted, if buying is strong, will not see it as a negative, but just remember that even if the price is going up, those shares would keep the others from going up as much as they would have.