april 9 2.38 warrants

[lsl428]

So the warrants represent 14 million shares of stock which translate into 140K April 2.38 Call options that expire on april 9th

If you extrapolate you can arrive at a value of those warrants today of about 3.2 million or a value of about 23 cents per call X 140K calls 

I got to this by taking the 4/5    2 calls adding to the 2.5 calls and dividing by 2 . That gets you a value on a 2.25 call. Take that call add to a 2.50 called again divide by 2 and you get a fair market value on the 2.375 calls....lets call it 2.38.

Then do the same math for the 4/12 expo options.....take that final  value and add them to the 4/5 value...divide by 2 and you get to a pretty good tradable value for the 4/9 warrants.

Personally I would not want to hold 140K calls options that expire in under 4 weeks without doing some hedging.. Theta decay alone is 123K a day in a linear fashion of course. It won't be consistent but its to give an example of how these things are gonna waste away.

Someone is gonna be hedging big time i would think on the shorter dated options before April 9th. 

Look for big block trades ....really big blocks would have to come in to truly hedge this massive position.

I dont care if they were awarded them for "free" . at this moment they have an approximate value of 3.2 Million dollars and will be losing that value every day we get closer to April 9.

Put it in your own perspective when you buy a 10 or a 50 lot of out of the money calls and see how you react.

Food for thought nothing more but significant position that will disappear  soon and leave overhanging hedging needs to evaporate at least for those particular warrants

[mnkdfann]

Using a Black-Scholes approach, I figured the warrant price closer to $0.18. I used parameters (risk free rate and volatility) that reproduced today's April 5 call option prices (for the $2 and $2.5 strikes) within a fraction of a cent each.

That doesn't change your point that the warrants have significant value overall, but for only a short while longer.

Beyond that, I'm not sure what to think.

You say someone is 'gonna BE hedging big time'. Maybe they HAVE BEEN hedged for a long while, and the ongoing process of closing out the hedge is what has driven the share price up recently?

[lsl428]

Mar 14, 2019 19:55:00 GMT -5 mnkdfann said:

Using a Black-Scholes approach, I figured the warrant price closer to $0.18. I used parameters (risk free rate and volatility) that reproduced today's April 5 call option prices (for the $2 and $2.5 strikes) within a fraction of a cent each.

That doesn't change your point that the warrants have significant value overall, but for only a short while longer.

Beyond that, I'm not sure what to think.

You say someone is 'gonna BE hedging big time'. Maybe they HAVE BEEN hedged for a long while, and the ongoing process of closing out the hedge is what has driven the share price up recently?

that's back of the napkin math splitting the bid/offer on all those strikes.....I say soon hedge wise  because there are no massive open interest numbers on any strikes even far out...and by massive nothing over a few thousand not close to the 140K represented by the warrants.

True that short stock hedges could be being bought back in causing the higher share price we now are seeing but when the 26 million share placement was done in December I would think that the same players that participated in the 2.38 warrants would have been able to cover any open short stock positions there

[agedhippie]

Mar 14, 2019 19:55:00 GMT -5 mnkdfann said:

Using a Black-Scholes approach, I figured the warrant price closer to $0.18. I used parameters (risk free rate and volatility) that reproduced today's April 5 call option prices (for the $2 and $2.5 strikes) within a fraction of a cent each.

That doesn't change your point that the warrants have significant value overall, but for only a short while longer.

Beyond that, I'm not sure what to think.

You say someone is 'gonna BE hedging big time'. Maybe they HAVE BEEN hedged for a long while, and the ongoing process of closing out the hedge is what has driven the share price up recently?

Black-Scholes overestimates the value of warrants if you don't adjust the price to account for dilution. It's not a bad approximation though.

[kpm1028]

when will we know how many of the $1.60 warrants have been exercised?

[mannmade]

I am no expert but why exercise until close to expiration which is end of 2019.

[sportsrancho]

Mar 15, 2019 9:59:18 GMT -5 kpm1028 said:

when will we know how many of the $1.60 warrants have been exercised?

Thats a good question for matt.
Someone else said 4 days after they get exercised. But no need to for months IMO.

[matt]

Mar 15, 2019 9:59:18 GMT -5 kpm1028 said:

when will we know how many of the $1.60 warrants have been exercised?

The fact that the company announced that the warrants were outstanding is sufficient disclosure under SEC rules; the company does not need to update the status more often than the quarterly report.  As each 10Q or 10K is issued, the footnotes will have the relevant disclosures about how many have been exercised and how many remain outstanding.  To the next snapshot is the 10Q for the period ending March 31, and that is due to be published on or before May 10.

As a general rule, no matter what, a holder should never exercise a warrant prematurely on a non-dividend paying stock.  Once a warrant is exercised the holder enjoys the upside in the stock, but they are also subject to the downside risk.  A warrant has value until expiration due to an implied put option and if the warrant is exercised early the value of the put is extinguished so it is better to sell the warrant than to exercise it.  Since the $1.60 warrants don't expire until December, don't expect them to get exercised this early.

[traderdennis]

Mar 15, 2019 9:59:18 GMT -5 kpm1028 said:

when will we know how many of the $1.60 warrants have been exercised?

If on the incredibly small chance the 1.60 warrants were exercised, MNKD would issue a press release. Since were in the period the 2.38's could exercise, the pr would be massive to try to pump up the price. Absence of that you can assume the warrants are not exercised.

[traderdennis]

Now what would be interesting is if the company would offer additional warrants at say 3.00 for every 2.38 warrant exercised by April 9th. Runway entered for another 4 months

[cjm18]

Mar 16, 2019 1:59:55 GMT -5 traderdennis said:

Now what would be interesting is if the company would offer additional warrants at say 3.00 for every 2.38 warrant exercised by April 9th. Runway entered for another 4 months

Pr required if that happens(if they accept)?

[traderdennis]

Mar 16, 2019 8:52:23 GMT -5 cjm18 said:

Mar 16, 2019 1:59:55 GMT -5 traderdennis said:

Now what would be interesting is if the company would offer additional warrants at say 3.00 for every 2.38 warrant exercised by April 9th. Runway entered for another 4 months

Pr required if that happens(if they accept)?

If they get a bunch of warrants to exercise they would be dumb not to pr it.
Of course my idea comes into ply much closer to April 9th if the price is in today’s range.

[brotherm1]

If my recollection serves me correct - and that’s a big if - we have about 12 or 14 million shares on the shelf?

[boca1girl]

Mar 16, 2019 1:59:55 GMT -5 traderdennis said:

Now what would be interesting is if the company would offer additional warrants at say 3.00 for every 2.38 warrant exercised by April 9th. Runway entered for another 4 months

I don’t like this idea.  Selling more shares at a low price and having warrants hanging out there for another 6-9 months is not what I would like to see.  We are expecting some good news in the “near term” that should move the stock price up.  I don’t expect news prior to the 2.38 warrants expiring, but the price could move up for other unforeseen reasons, triggering the exercise of the warrants.

[lsl428]

I want these warrants to go unexercised ...worthless..... We sold 20% of the company at 1.50 as it stands and I dont want to sell any more of the company at this low a valuation..... there is enough cash for a fair amount of time presently ....if we deliver more growth aspects whether it be rising scripts, pipeline movement, etc. we should see a higher share price which we can then use to our advantage  in raising funds at a more tolerable level.... I don't want to see warrants reissued at 3 bucks either...... I think if we execute we can raise funds with a market cap of at the very least a billion within the next year   hopefully higher