Replies to post #14771 on uWink Inc. (UWKI)

[notanindex]

I won't go into your math, but let's leave it to say that that is how private offerings work. They are a discount to market with a nice upside built right in through optinality. That is with firms that have a hard time accessing capital. This was managed extremely poorly.

[the big guy]

I would think it would make SOME sense, but not maybe perfect sense. I don't try to pretend to know more than I do.

I am making a general statement about the nature of this deal which should have perhaps been obvious at the outset. I am equating the Warrant to Call Option because that is effectively what it is. I know it can be priced.. but that is difficult.

I think what I am saying makes perfect sense, that in order to induce people to buy in, the Warrants are a sweetener or an inducement. That inducement can be priced like an option.

I am guessing at .30-.50 for the warrants.. but that the buyers would still want a good price.

The price being discussed is 2.00. That seems pretty low to me, but not unbelievable. What is actually is remains to be seen.

I can add nothing more in terms of intelligent guesses. Can you?

[SOKAL6]

Options pricing

Ok guys, as I discussed in my previous post, I have priced the options value based on the information presented on this board using a Black-Scholes-Merton calculation.

I come up with a call option value of $1.42/share. See below for the calculation components, although most of you may get confused by it.

So that means the at 2/share, the investors are getting 1.92 ((2.5-2.0)+1.42) of upside. Basically a 96% sweetener. That is insane...

Here are my inputs:

S=Stock price in dollars and cents: 2.50
X=Strike price in dollars and cents: 2.40
T=Time to expiration in years: 5
R=Interest rate per annum as decimal percent: 0.05 is 5% per year
SIG=Volatility (Std Dev) in percent per annum: 0.6 is 60% per year (general market is usually .3 to .6 - I'll go aggressive on this since we know he stock to by highly volatile.)

S X T R SIG Dividend bond SIG*sqrt(T) d1 d2 Normal(d1) erf Normal(d2) Call Value Put Value Call Delta Put Delta Call Theta Put Theta Call Vega Put Vega Call Gamma Put Gamma Call Rho Put Rho Call Omega Put Omega
2.50 2.40 5.0000 0.0500 0.6000 0.0000 1.8691 1.3416 0.8876 -0.4541 0.8126 0.2691 0.3249 1.4243 0.7934 0.8126 -0.1874 -0.0023 -0.0005 0.0150 0.0150 0.0802 0.0802 0.0304 -0.0631 1.42636905 0.590439007


- SO KAL 6