Replies to post #37789 on Advanced Micro Devices Inc (AMD)

[yourbankruptcy]

Petz, interesting. That means 15 million bonds are covered with puts and not shorts. That means at least 15 million shorts are uncovered :-)

The game of squeeze seems to be attractive now. But I don't see any potential big news that may happen soon. AMD business is pretty much as usual and I see no big surprises like Dell or IBM fabbing Opterons.

So, most likely the game will be signaled by a major upgrade, coming from well known name with "buy" rating and $20 speculative target. I think you may just watch for all analyst opinions and one day one of them will signal the start.

[kpf]

Petz

Just noticed that there's open interest of 145,334 contracts on the AMD Jan 06 $5.00 put. Perhaps a big chunk of the convertible holders decided to just insure their holdings against bankruptcy while keeping most of their appreciation potential.

As it is open interest, it would appear somebody seeks insurance, or did I misunderstand?

Also, rather than shorting the stock, some convert holders might sell LEAP calls, and get some cash flow.

Could be. But iirc the terms of the convertibles allow AMD to buy back from Feb 05 already. Writing anything for dates beyond that would be uncovered. Plus, you can only write strikes for calls or leap calls above conversion price without adding risk to the game.

I tried to find historical short interest figures for AMD, but the NYSE only has monthly on their website. SI did rise from 47.3 to 53.7M shares from 4/10 to 5/10.

Dilution from full conversion of senior notes is about 54M shares. As I said, I look at this figure as being the shares sold short to be converted later from senior notes.

K.