SilverCrest Mines EPS of $0.03


SilverCrest Mines (SVLC): Q3 EPS of $0.03.

Revenue of $13.7M (-18% Y/Y). (PR)

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  • djlphd
    , contributor
    Comments (6) | Send Message
     
    SilverCrest Mines - The calculation of Warrants:

     

    Valuing Warrants with the Black-Scholes Model

     

    In the Black-Scholes model, the valuation of a call option is expressed as:
    C = S N(d1) - X e-rT N(d2)
    Where:

     

    C = price of the call option

     

    S = price of the underlying stock

     

    X = option exercise price

     

    r = risk-free rate

     

    T = time until expiration

     

    N() = area under the normal curve

     

    d1 = [ ln(S/X) + (r + σ2/2) T ] / σ T1/2

     

    d2 = d1 - σ T1/2
    Because of the dilution that warrants represent, the value of that call needs to be divided by (1 + q) where q is the ratio of warrants to outstanding shares, assuming each warrant is worth one share.

     

    The Bottom Line

     

    Warrants can offer value to an investor's portfolio, however, investors need to focus on various market movements due to risk. Investors need to do their own due diligence before investing in companies that include warrants with the purchase of common shares of stock.

     

    12 Aug 2015, 11:28 AM Reply Like
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