Under this tab you can define up to two convertible securities (convertible bonds, preferred stock, or warrants) connected with an asset. Click on tabs 1 or 2 at the bottom to select convertible security #1 or convertible security #2 (outlined in the bottom-left corner of the example below). To eliminate all convertible securities information, click the Clear button while the Convertible Securities tab is active.
Below are brief descriptions of the fields that may be needed to define a convertible security.
Convertible Security Type. Use the drop-down menu to choose Convertible Bond, Preferred Stock, or Warrant. As you change this field, the fields beneath it will change to those relevant to the type of security (e.g. Yield to Maturity is displayed only if the Convertible Security Type is Bond).
Symbol. The unique ticker symbol of this convertible security should be the correct one for getting a quote from your data service. Once the Symbol field is filled in, the program considers the convertible security defined, but you must still fill in the rest of the fields before the program will allow you to leave this tab. This insures that no convertible securities are left partially defined. If you clear the Symbol field, the program considers the convertible security “gone” regardless of whether the rest of the fields are still filled in.
Description (warrants only). This is a brief, one to four letter description of the warrant. Most companies assign a single letter (i.e. “A” or “B”) at the time of issue. The program uses this description in its displays and reports.
Bond Coupon Rate (convertible bonds only). This is the stated coupon rate, typically written with the name of the bond.
Maturity Date (for bonds) or Expiration Date (for warrants). The last day in the life of the convertible security.
Annual Dividend (preferred stock only). The annual dividend per share in dollars.
Ex-Div Date (preferred stock only). This is any ex-dividend date. It may be any recent or future ex-dividend date that you know of. The program is able to project forward or backward to determine the number and size of dividend payments that will be incurred during any time period under consideration.
Payment Dates (convertible bonds only). This is an expression for the bi-annual payment date. OptionVue 5 uses this to estimate the amount of accrued interest that will have to be paid when purchasing these bonds.
Conversion Ratio. This is the number of common shares obtainable by the conversion of one unit of this convertible security.
Per Share Exercise Price (warrants only). The dollar amount per warrant that must be submitted to exercise or “convert” the warrants to common shares.
Current Price. This is the current market price of the convertible security.
Current Yield. This is an output-only field, included for your information. The program computes current yield by dividing the coupon (in the case of a bond), or the annual dividend (in case of preferred stock), by the current price.
Yield To Maturity. This is an output-only field, included for your information. The program computes and displays the yield to maturity for convertible bonds.
The Price Relationship Fields. The six fields on the right hand side of the dialog define the price relationship between the common stock and the convertible security. These numbers can be obtained from independent sources such as the Value Line Survey of Convertible Securities. You are encouraged to keep these numbers up-to-date, since the program uses this information to model hypothetical price changes for the convertible security based on various price movements in the underlying common stock.