How to Use the Stockwarrants.com Database

You can search the stockwarrants.com database using several different different criteria. For information on a specific warrant or its underlying stock, enter the warrant symbol, stock symbol, or company name in the text box, select "warrant symbol", "stock symbol", or "company name" from the search menu, and click on the "search" button, and you'll be presented with a link to the appropriate information. The search query also allows for wildcards: if, for example, you select "warrant symbol" and enter "ac", you'll receive a list of links to data on all warrants whose symbol begins with the letters "ac".

Note: Occasionally you'll find that our warrant symbols may differ from those you see in the newspaper or your favorite quote service. For example, we store data on NVR Corp as "nvr_w", whereas you might be more familiar with the symbol "nvrws. In such cases, use the wildcard feature in your search.

You can request a list of all in-the-money or out-of-the-money warrants by clicking on the appropriate text. This feature was added as the result of a user request.

To put the database to its most powerful use, search the database by selecting a Black-Scholes rating or stockwarrants.com rating ( the highest rating is 11, the lowest is 1). The Black-Scholes method is the classic method for warrant or option valuation...the Black-Scholes rating is obtained by taking the percentage difference between the calculated Black-Scholes value and the actual warrant value, dividing that result by the time left before expiration, and assigning an integer value to the result. The stockwarrants.com rating is obtained similarly, except that the warrant valuation method is different (see below for more information on these ratings). If you select "Black-Scholes rating" and the integer "10",you'll receive a list of all warrants whose Black-Scholes rating is 10.

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After you request information on a specific warrant, you'll receive various data. A brief explanation of some of this data...

Call information: If the warrant is callable, we'll let you know. If, for example, a warrant can be called if the underlying stock trades above $10.00 for 20 consecutive days, we'll say "callable at 10.00 for 20 days". If the warrant can be called when the average price of the stock exceeds or equals $10.00 for 20 consecutive days, we'll say "callable at 10.00 (average) for 20 days". If the warrant can be called when the stock price exceeds $10.00 for any 20 out of 30 consecutive trading days, we'll say "callable at 10.00 for 20 out of 30 days.

The terms "callable" and "redeemable" are often used interchangeably. Strictly speaking, the "redemption value" of a warrant is the money the owner will receive if the warrant is exercisable at expiration and he/she fails to exercise it...a stupid mistake. Unless the redemption value is unusually high, we won't bother to inform you of its price...the redemption value is generally irrelevant to the prospective investor.

If we don't know if a warrant is callable or not, you won't receive any call information.

Conversion ratio: The number of shares of underlying stock that can be bought with one warrant. If one warrant converts to two shares of stock, we say the conversion ratio is 2.

Volatility: This is a standard-deviation measure of the most recent 150 days of underlying stock prices. A very volatile stock will have a volatility of 2 or more, and a non-volatile stock will be .5 or less. Bear in mind that stock splits can skew such data (though we try to adjust the data as soon as possible).

Intrinsic Value: This is simply the strike price subtracted from the current value of the underlying security.

Black-Scholes valuation: The fair value of the warrant according to the most popular valuation model. Bear in mind that this particular calculation does not take dividends or call values into consideration. The calculation is made with the most recent 150 days of data.

The Black-Scholes rating: We rate warrants on a scale of 1-11. There's a reason for the "11"...we've found that when the price difference between the Black-Scholes value and the actual warrant value is exceptionally high, our warrant terms are likely to be flawed or there may be a fundamental reason for such a difference that we are unaware of (e.g. the company is about to be taken over and insiders are unloading their out-of-the-money warrants). Obviously, we'll try to correct our data as soon as possible if it's flawed. On the other hand, a warrant rated "11" might just be an incredible bargain and worth a second look.

The Stockwarrants.com rating: As above, we rate warrants on a 1-11 scale, using our own valuation system. This system does take a warrant's call value into consideration, but doesn't include dividends in the calculation.

The vast majority of stock warrants do not have dividend-paying underlying stocks. When a company does pay a dividend on the underlying stock, we'll try to let you know in our "comments" text.

Generally speaking, we believe that the Black-Scholes equation is particularly inaccurate when dealing with deeply out-of-the-money warrants. According to this equation, it's virtually impossible for a stock of average volatility to quintuple (or better) in the course of a year...yet experience shows this happens reasonably frequently (relatively speaking). Our valuation method, on the other hand, suffers most when warrants are just in-the-money.

Comments: Here we'll include any pertinent gossip, data not covered in the aforementioned categories, information regarding a company's past warrant history (has the company allowed warrants to expire worthless in the past?),etc.

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