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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: jbn3 who wrote (23846)	12/23/1999 12:28:00 PM
From: sepku	Read Replies (3) \| Respond to of 25960

48 7/8...is this a new all time hi???????????????????

To: jbn3 who wrote (23846)	12/23/1999 12:52:00 PM
From: Tenebrous	Read Replies (1) \| Respond to of 25960

Curley has reminded me of a scenario I had forgotten: selling the bonds themselves rather than converting. If you sold the bonds, you could reap whatever time-value premium comes from their convertability. I haven't looked at what the bonds go for, but considering Cymer's current price level and volatility, I presume this premium is high. The tax consequences of selling the bonds are immediate, versus converting the bond to the stock (see below). The only scenarios I can envision where conversion would make more sense than a direct sale of the bonds would be (1) if the sales costs for the bonds are higher than the time-value premium, or (2) you wanted to own the stock and start the long-term capital gains clock running sooner than the bond expiration date. As for your other questions, I'm not a tax professional, so take the following as my opinion and worth what you're paying for it. I've used these rules in my option trades and haven't drawn an audit yet, but that could just be luck. I suggest consulting a tax professional before doing anything. If you were to convert, it's not a taxable event. For purposes of long-term cap gains, your ownership begins on the date of conversion. The cost basis is the conversion price. Buying more bonds today would be similar to buying options: there's a time premium associated with the cost, and it will decay over time. It might be a complex calculation given that the bonds yield an income (which options do not do), but perhaps you could do a Black-Scholes analysis to decide whether owning the stock versus the bonds would be better (don't forget to crank in the costs of acquiring the bonds). To preserve your sanity, it might be better to look at pure options, however. Much easier to value.