[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]  TheUltimator5 [@TheUltimator5](/creator/twitter/TheUltimator5) on x 8935 followers Created: 2025-04-06 13:33:51 UTC Bond - Equity swap for $GME Arbitrage between credit risk (bond price) and equity risk (stock price. Long bond exposure, short stock exposure. Shorting the stock gives downside risk mitigation in the event that the stock price falls, while bond maturity price is held constant. When a massive bond is opened and there is a large perceived discrepancy between the stock price and the bond price, this results in heavy swap volume to cancel out the perceived gap in valuation between the stock price and bond price. As a result, huge short positions are opened up very rapidly. As long as the stock price remains below sufficiently below the conversion price, the swap remains profitable. Above the conversion price, no net gains are made, and the counterparty will be losing based on interest rate and inflation risk. This means that with the new bonds, short exposure just skyrocketed and are likely using the bonds as a long hedge. That’s what I think has been happening this past week.  XXXXXX engagements  **Related Topics** [gme](/topic/gme) [fixed income](/topic/fixed-income) [credit default swaps](/topic/credit-default-swaps) [$xwp](/topic/$xwp) [$gme](/topic/$gme) [stocks consumer cyclical](/topic/stocks-consumer-cyclical) [stocks bitcoin treasuries](/topic/stocks-bitcoin-treasuries) [Post Link](https://x.com/TheUltimator5/status/1908875804869636525)
[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]
TheUltimator5 @TheUltimator5 on x 8935 followers
Created: 2025-04-06 13:33:51 UTC
Bond - Equity swap for $GME
Arbitrage between credit risk (bond price) and equity risk (stock price.
Long bond exposure, short stock exposure.
Shorting the stock gives downside risk mitigation in the event that the stock price falls, while bond maturity price is held constant.
When a massive bond is opened and there is a large perceived discrepancy between the stock price and the bond price, this results in heavy swap volume to cancel out the perceived gap in valuation between the stock price and bond price.
As a result, huge short positions are opened up very rapidly.
As long as the stock price remains below sufficiently below the conversion price, the swap remains profitable. Above the conversion price, no net gains are made, and the counterparty will be losing based on interest rate and inflation risk.
This means that with the new bonds, short exposure just skyrocketed and are likely using the bonds as a long hedge.
That’s what I think has been happening this past week.
XXXXXX engagements
Related Topics gme fixed income credit default swaps $xwp $gme stocks consumer cyclical stocks bitcoin treasuries