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Strategies & Market Trends : Floorless Preferred Stock/Debenture
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To: F. Lynn who wrote (472)6/15/1999 11:05:00 PM
From: Zeev Hed  Read Replies (1) of 1438
 
F. Lynn, but you forget in the case of the floorless, the pledge (actual deposition of the floorless convertible instrument with the broker), is good for an increasing number of shares as the short causes the stock to go down. Let say it is a $1 MM and the stock is $5, it is good for shorting at least 200,000 shares, if that shorting cause the stock to drop to let say $2.5, now it is good for shorting another 200,000 on top of the first batch. That is how the death spiral works.

Zeev
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