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Re: [sharechat] rights, options and warrants


From: "Brent Wheeler" <brentw@bwcl.co.nz>
Date: Wed, 15 Sep 1999 16:29:15 +1200


<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META content="text/html; charset=unicode" http-equiv=Content-Type> <META content="MSHTML 5.00.2614.3401" name=GENERATOR> <STYLE></STYLE> </HEAD> <BODY bgColor=#ffffff> <DIV><FONT size=2>For What it is worth Lindy</FONT></DIV> <DIV>&nbsp;</DIV> <DIV><FONT size=2>Rights - if you own some shares and the company issues some rights, say 2 for 1, then for each share you own you could "exercise"&nbsp; your right and buy 2 more for every one you own at the specified price.&nbsp; An advantage which the non owning punter does not have.</FONT></DIV> <DIV>&nbsp;</DIV> <DIV><FONT size=2>Options - come in two species:</FONT></DIV> <DIV><FONT size=2>A "call option" - the right, but not the obligation, to purchase a share at the price specified in the call option.&nbsp; If that price is below current market then you get "cheap" shares. If it is not you don't bother exercising the option.</FONT></DIV> <DIV>&nbsp;</DIV> <DIV><FONT size=2>A "put" option. Precisely the reverse.&nbsp; The right but not the obligation to sell shares at the price specified in the option.&nbsp; If that price is above market value there is money to be made, if not, you don't exercise the option.</FONT></DIV> <DIV>&nbsp;</DIV> <DIV><FONT size=2>Warrents - yuk - so idiosyncratic case by case as to defy simple description.</FONT></DIV> <DIV>&nbsp;</DIV> <DIV><FONT size=2>Hope this helps.&nbsp; Other share chatters will pull up my simplistic bits I'm sure</FONT></DIV> <DIV><FONT size=2>B</FONT></DIV> <DIV>&nbsp;</DIV> <DIV><FONT size=2><BR>Dr Brent Wheeler<BR>Director<BR>Brent Wheeler &amp; Co. Limited<BR>AUCKLAND</FONT></DIV></BODY></HTML>

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