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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: Ally who wrote (11288)	5/17/2001 10:28:34 AM
From: Zakrosian	Respond to of 15615

What is a "floorless" convertible? From which textbook did this term come from? Can you give an example on the features of a floorless convertible Message 5368910

To: Ally who wrote (11288)	5/17/2001 10:28:44 AM
From: BWAC	Read Replies (1) \| Respond to of 15615

Ally, If I had the choice I would only buy convertibles. No the trading profits aren't guaranteed, but things definitely swing into your favor for a decent steady return. Convertibles come in two basic varieties. Floorless do not have a defined conversion price to the low side. They might just be convertible for how ever many shares are necessary to pay the note off. If the stock is $2 then a lot of shares would get issued to equal a $500 million note for example. If the stock is $30 then not so many shares would be issued on conversion. These are normally issued by struggling weak companies. Run for the hills on these. The lower the stock price can be driven, all the better for the convert holders. Short immediately upon the note issue date, and constantly for as long as you can, then you get a maximum number of shares upon conversion, and have created a fantastic riskless leverage play. Worst case, it all blows up and you collect only interest payments for profit. The GX type convertibles, (and most strong companies) have a fixed conversion price. Somebody can step in a give the exact price for GX please because I forgot. Lets just say its $40. No matter the market price the conversion price is $40. But still the safest return is to short and collect interest at first. Sure you may cover your short at some point. Then you have short profits, interest payments, and upside potential above the conversion price. Give me access to buying convertible notes please. It is a sweeeeet deal. Edit: Ally. Zarkrosian provided a great example in the prior message. Much better than mine.