The only waiting time is the speed of the debenture holder and the off shore broker. Once the deal or debenture is inked the debenture holder can start shorting against the note. then when the pledged stock is placed into the escrow account the short position will be placed against that stock. Another words shorting against the box.
investors who purchased convertible notes have conservative investment objectives. They tend to have lower risk tolerance and want to generate a steady return on their investment. With that in mind, when shares of AAPL appreciates dramatically over the conversion price of $29.205 many institutional investors who hold these notes will be inclined to take the profit. One way to lock in their profit is by shorting AAPL against the convertible notes. This strategy not only locks in existing profit but can actually deliver even more profit if shares of Apple stock drops back down below the $29.205 conversion price. Furthermore, the convertible notes holder continues to earn 6% interest on the notes. Thus when utilized with a short position, the convertible notes can be a flexible trading tool that provides downside protection.
But to keep things in prespective those shorted shares are not really shorts at all because they are covered by the convertible note. This is why a lot of attempts in the past few years to try an get a short squeeze fail. They are not exposed to the risk of a "short squeeze" like a typical short seller would when the stock rallies.
An IPO is a different animal.
:-) Gary
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