Gamestop Convertible Bond Arbitrage - What you NEED to Know & What Social Media is Getting Wrong

Gamestop Convertible Bond Arbitrage - What you NEED to Know & What Social Media is Getting Wrong. On April 1, 2025, GameStop Corp. completed its previously announced private offering (the “Offering”) of $1.5 billion aggregate principal amount of 0.00% Convertible Senior Notes due 2030, including the exercise in full of the initial purchaser’s option to purchase up to an additional $200 million aggregate principal amount of Notes. In this video I break down the basics of how institututional buyers of these bonds view the trade, how they hedge, why they hedge, how convertible bond arbitrage affects Gamestop's short interest, and hopefully how you can use all of this knowledge to improve your own trading strategy. Always do your own due diligence and feel free to fact check information in this video & send me questions or comments if you have them! #TonyDenaro #arbitrage #GME

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DISCLAIMER: Content, strategies and opinions on this channel are for entertainment purposes only. These are Tony's opinions, not specific investment or legal advice for you. Always do your own due diligence, read company filings and financial statements and seek a duly licensed professional for investment, tax or legal advice. Past performance is not a predictor of future results. This is not personalized but rather general educational and informational material.

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CHAPTERS:
00:00:00 Intro
00:02:00 Key Concepts
00:03:30 The Speculative BTC Bet
00:04:30 Why Bet on BTC
00:06:45 What is a Zero Conv Bond
00:07:15 Convertible Bond Diagran
00:07:45 What is Convertible Bond Arbitrage
00:10:00 Bondholders Dont Care About Share Price
00:11:00 What is Hedging
00:12:20 What is the Initial Hedge
00:12:48 Dynamic Hedging
00:15:14 Is Zero Percent Coupon Bullish
00:16:40 Do Bondholders Love Gamestop
00:18:00 Shorts Are Not Scared
00:18:45 Are the Bonds Dilutive
00:21:20 Diluted EPS
00:22:20 What is a Soft Call
00:24:45 Are Bond Buyers Diamond Handers
00:26:45 Wrap Up