We appreciate your attention in this episode of our technical analysis where we kicked it into high gear and took some fundamental analysis and approached it from a technical perspective. Remember, as the sector shows signs of volatility so don’t be afraid to take advantage of the technical skills you are budding into. We will continue to help you build upon your skills with every edition until you are high on knowledge.
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What happens if you buy the convertible debentures lower than the offering:
Well if you can manage to get them cheaper than they were issued then you will supercharge your gain potential. Let's say you can get the debentures at 95% of their initial invest…. So in the example above you could get $10,000 worth of convertible debentures for $9,500. You would end up getting the $10,000 back at the end of the term too. On top of this, your 6% interest rate would really be 6.3%
What happens if you buy the convertible debentures higher than the offering:
There could be reasons why you would purchase the convertible debentures at a higher price than they were issued and still be profitable. For example, let's say you pay 105%. In our initial scenario that would mean we pay $10,500 for the $10,000 worth. So right off the bat we know we will lose $500 when the principle is returned, however, the interest accumulated along the way will make up for this. Depending on when you decide to buy these at this price you would recoup enough interest to offset this amount. So if you purchase these shortly after reading this article you will end up collecting well over $1,000 in interest payment and thus netting a gain. Reason to purchase above the initial offering a quite simple. You are optimistic about the company, but looking to limit the potential downside or reduce the volatility in your account to help you sleep easier at nights.
Hopefully, this fresh look on convertible debentures will help you achieve your gains to go on convertible adventures.
Organigram Holdings Inc. DB
(TSXV: OGI.DB)
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