rjp

Taxpayers Will Benefit from JPMorgan's Exit from TARP

88.4MM warrants with a strike price of $42.42 that someone estimated were worth $20.20 in late April versus $35 stock - at a 54 vol they were worth that, but today with vol at 39 versus $42, they are worth $21.25 – and 39 vol is still historically too high. JP Morgan Chase can posture all it wants but it knows its stock volatility will normalize over time and that this will work in its favor (and a return to it’s former 38¢ quarterly dividend knocks another $6 off off the warrant’s value). Because of the length of the term left to the options, over 9 years, JP Morgan Chase knows the warrants won’t be exercised for years and will just be traded as an individual issue.