SB OML CL Can someone be so kind as to read my question regarding this warrant? I think i understand it now but i'd like to be certain if my calculations are correct. Details of warrant SB OML CL : Name: SB OML 950CL 6:1DEC09 Issuer: Standard Bank Underlying share: OLDMUTUAL Exercise Price: R 9.50 Expiry Date: 01 Dec 2009 Type: American Call Conversion Ratio: 6.00 Delta: 74.49% Implied Volatility: 92.79% Gearing: 2.62 Weekly time decay (theta): -2.20% Days To Expire: 102 Last Updated: 19 Aug 2009 So lets assume i buy 10 000 warrants @ a total cost of 57c each = R5700 in total. I'm now entitled to 10 000 / 6 (conversion ratio) = 1667 OML shares should i decide to exercise them on expiry date. Therefore lets assume that on 1 december 2009, the expiry date, OML is trading on the market @ 12.90. In that case my total costs will be Warrant cost of R5700 + exercise price of (R9.50x 1667) = R21 536 Should i then sell my 1667 OML shares directly on the market, i will be make 1667 x 12.90 = R21504. So in that case , i'll be breaking even just about, exl lets say R200 worth of brokerage costs. So in other words I must hope that by 1 December 2009 (exercise date) that OML is trading at least above R12.90 before making any profits. So lets then assume that on 1 December 2009 OML is trading on the open market @ 15.00 I will then be entitled to make R15.00 x 1667 = R25005 by selling them on the open market (MINUS) the warrant + exercise cost of R21536 = R3469 profit Therefore 3468 / 5700 = 60% profit as opposed to making (R5700 x ((15-11.70) / (11.70)) = 28% had i just bought R5700 shares on the open market and sold them. Is this correct the way i see it? Also if lets say for some peculiar reason OML shares go down to R4 and i don't exercise it, i then lose my R5700 premium i paid for the option right?