Aokam Perdana Berhad

Abstract

When you hold put options on a convertible bond, it is considered to be a wonderful opportunity to profitfrom the upside potential of the underlying security while enjoying downside protection. A Singaporebased portfolio manager of a London-based fund has investments in Euro convertibles with put options of a large Malaysian timber company. However⁄ he is jolted out of his sense of complacency about his put options when he learns that the put option may spell bankruptcy for financially weak companies like Aokam Perdana Berhad. So⁄ aren't put options safe after all?

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