timpb trade of the day

here is the trade of the day

Buy TIMPB; if TIM share price stays above 51 cents in Sep09, I calculate equivalent rate of return is 60% per annum with the bulk of the return as a 47% capital gain. Breakeven is TIM share price at 26 cents.

If you worried about TIM share price, you can buy TIMPB and sell short TIM. This reduces return if TIM rallies in Sep09. But with all the scrip flooding market in Sep09 from exchange of TIMP to TIM, a big rally is unlikely. Most likely outcome is TIM falls and TIMPB rises over next year.

Comments or questions welcome.......