Kevni Mke
54 posts


I see investors falling for the capped call language in a convertible debt offering.
The company has to pay for the capped call. They use millions of dollars of cash for it. They can make the capped strike as high as they want, it just costs them more cash.
The strike of the converts is what is relevant for market pricing. That’s what convertible bond buyers are getting.
The capped call part is spending cash for investor optics, and they do it because it’s effective and works.
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