Convertible Hedge investors? Message Board

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Strategies & Market Trends : Convertible Hedge investors?

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To: Ted S who wrote (60)	2/2/1998 5:20:00 PM
From: Scott Mc	of 107

Ted, there are a number of factors, the brokers I use do not let me offset margin with the cash from shorts so I never do full hedges...I usually do approx 50% hedge and try to increase and/or decrease it as the stock goes up or down(ideally it goes up AND down alot). In my mind the order of importance in a full hedge are 1. Call features.(ideally you want at least a few years) 2. Premium = Max loss (assumes no dividends, spin off etc etc) 3. Interest (rule of thumb Net Interest x 2 = premium or better) Its a tough game since you are competing against folks who pay no commissions and can earn interest on their short positions... Scott

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