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Non-Tech : Bill Wexler's Trading Cabana -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (3451)4/23/2008 3:43:51 PM
From: RockyBalboa  Respond to of 6370
 
The ambac crash provided an excellent entry into MBI below $9.

The Ambac PRZ instrument is not easy to value. But that package contains a lot of ambac optionsality and a bond paying 9.5% for 3 more years.

At $33 this is a current yield of 15% compounded which must be deducted. The clean price of about $21 is well below the implied stock price. By hedging only a part (6.27) at 3.50 the clean price can be brought in and leaves some optionality open.


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