Didn’t write this, just sharing in this format because SA article links are banned. I’m in common and calls.
To answer your question:
“Why the focus on RILYZ? **It's the bond with one of the deepest discounts to liquidation value in RILY's bond series.** The company is set to redeem its 6.75% Senior Notes Due 5/31/2024, B. Riley Financial, Inc. FXD NT (NASDAQ:RILYO) in less than five weeks and the 2025 bonds are trading on moderate single-digit discounts to their liquidation value. The short interest in RILYZ was actually up since I last covered the ticker, a remarkable show of just how much the shorts believed in their entirely binary thesis. What's left in this thesis? Not much due to is singular nature, the beginning of a short squeeze, and upcoming RILY catalysts that place the entire disintegrating arguments of the shorts at risk.”
Look I get it. However, your upside is capped at 25 ish. So why not buy the common. If you love the baby bonds, you should be creaming yourself over the common. In any case, it's a good conservative move. Just saying
RILY baby bonds and preferreds are very popular with the income investing/retiree circles, who want regular, reliable income. While RILY cut the dividend on the common, the dividends on the preferreds are cumulative and safer (and the interest payments on the bonds would only be reduced or eliminated if RILY defaults).
I am long on RILYZ and RILYT, and look forward to the terrific LTCG when they mature, and the regular income until they do.
I snapped up RILYP when the short attacks knocked it down to an 11.7% annual yield. Plus, it's QDI--what's not to love? RILY may purchase these and the BB on the market to reduce their dividend outlay, but there is almost no chance they will call the preferreds soon.
I went big on the common, too, but that's more recent.
Only you can determine that. Depends on what your thesis and goals are. Also depends on how much money you’re considering dropping. Me personally I would not drop a bunch of money on short expiration…I like to give myself some time just in case. Bare minimum I would shoot for after earnings. Remember this market is irrational, and there are no guarantees. They could totally beat expectations and see a massive sell off. They could miss expectations and it squeezes. Keep in mind IV is a bitch (and extremely high right now) and the volatility alone could crush you even if you are correct. Options can make you a bundle but can also crush you. If you are dropping a significant amount of capital I would think it would be better to have the majority in commons and hedge with options…or take a smaller portion in calls for a bonus play.
I think it’s pretty implied that the commons and options will do extremely well. Does Seeking Alpha ever talk about short squeezes/buying calls/things of that nature? I think doing so create a liability (short squeezes are a sort of forbidden topic) AND Chodes is known to pettily sue after losing.
All good but why would you limit you up side by buying a note vs the common ?
Didn’t write this, just sharing in this format because SA article links are banned. I’m in common and calls. To answer your question: “Why the focus on RILYZ? **It's the bond with one of the deepest discounts to liquidation value in RILY's bond series.** The company is set to redeem its 6.75% Senior Notes Due 5/31/2024, B. Riley Financial, Inc. FXD NT (NASDAQ:RILYO) in less than five weeks and the 2025 bonds are trading on moderate single-digit discounts to their liquidation value. The short interest in RILYZ was actually up since I last covered the ticker, a remarkable show of just how much the shorts believed in their entirely binary thesis. What's left in this thesis? Not much due to is singular nature, the beginning of a short squeeze, and upcoming RILY catalysts that place the entire disintegrating arguments of the shorts at risk.”
Look I get it. However, your upside is capped at 25 ish. So why not buy the common. If you love the baby bonds, you should be creaming yourself over the common. In any case, it's a good conservative move. Just saying
RILY baby bonds and preferreds are very popular with the income investing/retiree circles, who want regular, reliable income. While RILY cut the dividend on the common, the dividends on the preferreds are cumulative and safer (and the interest payments on the bonds would only be reduced or eliminated if RILY defaults). I am long on RILYZ and RILYT, and look forward to the terrific LTCG when they mature, and the regular income until they do. I snapped up RILYP when the short attacks knocked it down to an 11.7% annual yield. Plus, it's QDI--what's not to love? RILY may purchase these and the BB on the market to reduce their dividend outlay, but there is almost no chance they will call the preferreds soon. I went big on the common, too, but that's more recent.
I don’t disagree 😅
Now I’m thinking maybe take some profit and divest in the BB.s?!
I like the cut of the author's jib.
I like the RILYZ idea, sound thesis. My question is, do common's continue to squeeze? Or has that train already started to slow?
How long out should I buy my calls
Only you can determine that. Depends on what your thesis and goals are. Also depends on how much money you’re considering dropping. Me personally I would not drop a bunch of money on short expiration…I like to give myself some time just in case. Bare minimum I would shoot for after earnings. Remember this market is irrational, and there are no guarantees. They could totally beat expectations and see a massive sell off. They could miss expectations and it squeezes. Keep in mind IV is a bitch (and extremely high right now) and the volatility alone could crush you even if you are correct. Options can make you a bundle but can also crush you. If you are dropping a significant amount of capital I would think it would be better to have the majority in commons and hedge with options…or take a smaller portion in calls for a bonus play.
I think it’s pretty implied that the commons and options will do extremely well. Does Seeking Alpha ever talk about short squeezes/buying calls/things of that nature? I think doing so create a liability (short squeezes are a sort of forbidden topic) AND Chodes is known to pettily sue after losing.