Hi Scott,
Nice to see someone else into Covertible hedges. I just signed on with SI today after accidentally stumbling into the web site.
I read Abrams book (Profit Taker) when it first came out (15-20 years ago?). It didn't seem to have much potential, so it didn't pursue. I always like to try out a new strategy by looking at historical data. I couldn't find historical quotes on convertible bonds, so I moved on.
Recently I bought Abrams new edition of Profit Taker - pretty much the same as the original - and decided to check out the strategy again.
Actually I was deep into Covered call writing. For being a "conservative" strategy, I was losing money. I got whip-sawed by high tech stocks! Anyway since my motto is "get rich slowly", I decided to move on and find a more consistent/reliable strategy.
I use a discount broker in Florida (Empire Financial)- very friendly. (I think most discount brokers go to a school on how to be rude to their customers!)
I've set up a couple of hedge situations- per Abrams - (Office Depot and Capstone Capital Trust)- but not much action so far.
My broker says the convertibles I'm interested in are thinly traded - no "asks" available. So, I've been throwing "bids" into a black hole to see if I get any action. This is ok when setting up the hedge, but I see problems when I want to sell the convertibles on the downside.
Since I'm interested in historical quotes, I subscribe to TBSP which offers daily historical options and Canadian stock quotes - something it sounds like you are into. By the way, I'm a Yank from California - more specifically San Jose, home of Sharks hockey team ( I know you Canucks are all in to ice hockey!).
Anyway, getting back to convertibles, there seems to be a correlation between low premiums (good),and thinly traded issues (bad).
Do you have any thoughts on this dilemma ?
Hope to hear from you!
Thanks.
Ted S |
