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Technology Stocks : Cymer (CYMI)
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To: orkrious who wrote (18647)7/22/1998 10:35:00 AM
From: Zeev Hed  Read Replies (2) of 25960
 
Jay, the money they get (when they short the stock against the block), is now used in another transaction. If they want to cover their short, they must make a decision that deploying this money (long) in CYMI is a better return than the new transaction they are involved with. As far as they are concerned, once they have hedged their debenture position by shorting against the block, this transaction is closed, while they continue to collect 4% on no money invested (they collect their capital gain upon shorting). They come back to it only upon redemption (well at least if they "obey" the hedging principles that got them to short in the first place), and on redemption, they do not cover, they deliver the stock from the conversion.

Zeev
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