That same year I began using the formula to trade and hedge over-the-counter warrants and options and, a little later, convertible bonds. An option to buy a stock is similar to a warrant, the principal difference being that warrants are typically issued by the company itself and options are not. Convertible bonds are like ordinary bonds but with the additional feature that they can be exchanged for a fixed number of shares of the issuing company’s stock if the holder so desires.
Do these inefficiencies still exist? He was estimating warrant/convertible/option value and presumably there are better means of computing them now and computing resources to do them insanely fast. Where would he turn in 2018 for opportunities that haven’t been closed already? These days, don’t you need to be the first quant to catch an inefficiency to actually make money?
