CONVERTIBLE ARBITRAGE

INDUSTRY DESCRIPTION

Convertible Arbitrage involves taking long positions in a company’s convertible securities while simultaneously taking a short position in a company’s common stock. Convertible arbitrage seeks to profit from price inefficiencies of a company’s convertible securities relative to its company’s stock. Although simple in theory, proper execution of this strategy requires careful timing to avoid losses. Increasing in popularity, convertible arbitrage has effectively diminished available price inefficiencies, making it difficult to achieve significant returns without using extensive leverage.

Type:
ALTERNATIVE INVESTMENT