Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Ditchdigger who wrote (24153)	3/9/2001 3:44:33 PM
From: Sergio H	Read Replies (1) \| Respond to of 29382

Ditch, I think that Ken is right on the mark on his assesment of the bond vs stock price as an arb play. If you look at the link Ken posted, there's an excellent explanation of the relationship between the bond price and the stock price. nasdaq.com I would venture to guess that most of the short position is a hedge by the covertible holders. The larger the divergence between the stock price and the bond price, the larger the short position will be. A good illustration is recent activity on DRS. The large short position was 100% hedge on the convertible position because the warrants were trading at a premium to the stock price. The arbitrage position did prevent the stock from moving beyond its trading range. Take a look at the chart. The warrants were called and the shorts coverered, evaporating the price divergence between the warrant and the stock and pushing the stock up. Cary says hello....FROM HAWAII!!! We're up to 40 inches deep in snow now. I wonder if my dinner date is cancelled. Sergio