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Strategies & Market Trends : Floorless Preferred Stock/Debenture
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To: P314159d who wrote (958)9/11/1999 2:31:00 AM
From: Larry Brubaker  Read Replies (1) of 1438
 
P3, I'd be somewhat surprised if it goes as high as $10. $9 has been a pretty firm top since the floorless was done. It is likely that is the area that Castle Creek et al are putting in their hedge, and that is nicely above the ceiling conversion price of $6.37. $9 allows them to lock in a nice gain of nearly 50%. Although your strategy of taking your position incrementally makes sense.

Note that the ceiling conversion price declines to $4.46 in April 00, if the stock price is below this level come April. Therefore, I would think it quite likely the price declines to below that level by April.

In the meantime, I would not be surprised to see a trading range between about $6 and $9. With the bandits shorting at the high end and covering some at the low end. While steadily increasing their overall short position.

That's my guess for how they'll play it. The guess is based on closely watching how the VLNC floorless has played out, but still is just a guess.
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