How to make a deeply out-of-the-money market

Discussion in 'Options' started by paradigm, Apr 18, 2017.

  1. JackRab

    JackRab

    Or the provisions in (not) paying the interest for a few years...

    The perpetual nature means big effects in long term rate changes... maybe less so for this specific one, but if it has a fixed 5% and you buy it at above par... that will still hurt quite a bit when long rates go up...

    Anyway, I learned my lesson... not touching those until they sit at 30-50...
     
    #41     Apr 19, 2017
  2. sle

    sle

    It's gonna exchange, though, so you will own regular equity after the mandatory date (or earlier if an "event" occurs). I'd guess these things are as good as owning equity minus the voting rights, with an adjustment due to call convexity. Still mostly shit at the issue price, obviously.

    PS. these things are fucking complex, love it :)
     
    #42     Apr 19, 2017
  3. JackRab

    JackRab

    All right... you've got me into reading that prospectus.... damned...
     
    #43     Apr 19, 2017
  4. JackRab

    JackRab

    So, that exchange is interesting indeed... 15 Dec 2020. Could be interesting to hold this during the 20 days before.
     
    #44     Apr 19, 2017