Graabak on Nostr: Buyers of Strategys convertible debt often use convertible arbitrag, buying the debt ...
Buyers of Strategys convertible debt often use convertible arbitrag, buying the debt and shorting the stock to hedge.
How It Works
Convertible debt can be converted into shares. Hedge funds buy it and short the stock to offset stock price drops, aiming to profit from volatility and interest.
Timing
1. Announcement (Feb 18): Strategy reveals the offering. Investors analyze but don’t act yet as terms aren not final yet.
2. Pricing (Feb 19): Terms are set soon after, possibly Feb 19.
3. Shorting (Post-Pricing): They short Strategy stock after securing debt, likely late Feb 18 or early Feb 19, based on the bond’s delta.
4. Settlement (T+2): Debt settles (Feb 20), but shorting starts earlier.
Likely Timing/Conclusion:
- Debt Purchase: Committed late Feb 18 or early Feb 19, settled later.
- Shorting: Began Feb 19, post-pricing.
!!: Likely why we could see Strategy stock down 5% yesterday.
#btc #strategy
How It Works
Convertible debt can be converted into shares. Hedge funds buy it and short the stock to offset stock price drops, aiming to profit from volatility and interest.
Timing
1. Announcement (Feb 18): Strategy reveals the offering. Investors analyze but don’t act yet as terms aren not final yet.
2. Pricing (Feb 19): Terms are set soon after, possibly Feb 19.
3. Shorting (Post-Pricing): They short Strategy stock after securing debt, likely late Feb 18 or early Feb 19, based on the bond’s delta.
4. Settlement (T+2): Debt settles (Feb 20), but shorting starts earlier.
Likely Timing/Conclusion:
- Debt Purchase: Committed late Feb 18 or early Feb 19, settled later.
- Shorting: Began Feb 19, post-pricing.
!!: Likely why we could see Strategy stock down 5% yesterday.
#btc #strategy