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Was a lucky break (for the Rangers), said Lowry. Puck goes off my stick and finds their guy on the backdoor. That’s a tough way to lose. Evidence is also found that in severe market upturns the daily returns from a convertible bond arbitrage portfolio are negatively related to equities. In effect the returns to convertible bond arbitrage are akin to writing naked out of the money put and call options. Although this is not the first study to document the put option like feature in convertible arbitrage returns 1, it is the first to document the negative correlation between daily convertible bond arbitrage and equity market returns in extreme up markets.
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