written by reader PNC 2018 warrants fell like a rock.

By hakoelli, August 5, 2014

Travis and I has some of the warrants. Is it time to get rid of these warrants. H.A.K. , a new irregular.

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Travis Johnson, Stock Gumshoe
August 5, 2014 1:24 pm

Only you can choose what to do with your portfolio. I bought more not that long ago and have not sold any. PNC Warrants are levered plays on the underlying stock of PNC Financial Services, so if PNC common falls PNC warrants will fall more sharply — likewise, if PNC common rises, the warrants can rise more sharply. The warrants topped out around $26 a month or so ago and are right now near $22, so if that strikes you as “falling like a stone” then yes, this might be an investment that’s too volatile for you. The strike price for the warrants is $68 and change, so the warrants have a base value of $14 now because you could make that profit by buying and exercising them now, the remaining $8 is a bet on what happens over the next four and a half years. My personal bet is that PNC will continue growing slowly, and that the warrant will rise in value by 50% or so (if PNC shares go up by an average of 6% a year for four years, that would be a 25% return for the stock and a 50% return for the warrants, roughly).

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