How does conversion of Secured Convertible Notes work?
Let's assume that the bonds have a par value of $1,000.  If conversion happens, then one bond would be converted into 500 shares.  The price in the market is unimportant.  Regardless of the share price in the market, the income per share would be increased by the absence of $70 in interest expense.  It would be decreased by the lost tax deduction.  It would be further diluted by the increase in 500 shares.  Likewise, the debt would be extinguished and the equity section increased.  Whether it increased or decreased on a per share basis would depend upon the average amount paid in per share in the currently existing structure, adjusted for changes in retained earnings since the initial offering and for any treasury shares. There would be a loss in value, generally, if it is trading far from $2.00 because it would be valued based on the market price.  Had the bond not converted, it would trade in the market as a pure bond if the stock price is far below the strike price and as an ordinary pure bond plus a premium if near enough to the strike price in a manner that depends upon the time remaining under the conversion privilege.   I cannot think of a general case where someone would want to convert below strike and indeed, barring a very strange tax, inheritance or legal situation (such as a weird divorce), I cannot think of a case where it would make sense.  It often does not make sense to convert far from maturity either as the option premium only vanishes well above $2.  The primary case for conversion would be where the after-tax dividend is greater than the after-tax interest payment.
"Document how you came to have the stuff in the first place. First to defend against potential government inquiry; and second to establish that you held the asset more than one year, so you qualify for long-term capital gains rate.  I wouldn't sell it privately all at once, if you can avoid it.   If you can prove you held it more than a year,  you should pay the long-term capital gains tax rate, which is fairly low.  You'll keep most of it.  A huge windfall often goes very badly. People don't change their financial habits, burn through their winnings shockingly fast, overspend it, and wind up deep in debt.  At the end of the crazy train, their lives end up worse.   That wasn't your question, but you'll do better if you're on guard for that, with good planning and a desire to invest it in things which give you deferred income in the future. That's the cooler thing, when your investments mean you don't have to go to work! I don't mean donate ALL of it to charity. But feel free.  If you hold a security more than one year, and donate it to charity, you get a tax deduction for the appreciated value (even though the security didn't actually cost you that). (link) Do not convert the BTC to cash then donate the cash. Donate it as BTC.  Your tax deduction works against your highest tax bracket.  If you are paying in a 28% tax bracket (your next $100 of income has $28 tax), then for every $100 of charitable donation, you get $28 back on Federal. It does the same to state tax, and you also avoid the 10-15% capital gains tax because you didn't sell the securities.  Do your 1040 both ways and note the difference.***** Your charitable deduction of appreciated securities is capped at 30% of AGI.  Any excess will carryover and becomes a tax deduction for the next year, and it can carryover for several years. **  Use a donor-advised fund. If you have are donating more than $5000, you don't need to search for a charity that will take Bitcoin, and you also don't need to pick a charity now.  Instead, open a special type of giving account called a Donor-Advised Fund.  The DAF, itself, is a charity. It specializes in accepting complex donations and liquidating them into cash.  The cash credits to your giving account.  You take the tax deduction in the year you give to the DAF.  Then, when you want to give to a charity, you tell the DAF to donate on your behalf***.   You can tell them to give on your behalf anonymously, or merely conceal your address so you don't get the endless charity junk mail.   The DAF lets you hold the money in index funds, so your ""charity nest egg"" can grow with the market.  Mine has more than doubled thanks to the market.  This money is no longer yours at this point; you can't give it back to yourself, only to licensed charities. The Fidelity Donor Advised Fund makes a big thing of taking Bitcoin, and I really like them. **** I love my DAF, and it has been a charitable-giving workhorse.  It turns you into a philanthropist, and that changes you life in ways I cannot describe. Certainly makes me more level-headed about money.   Lottery winner syndrome is just not a risk for me (partly because I'm now on the board of charities, and oversee an endowment.)  Donating generally will reduce suspicion (criminals don't do that), but donating to a DAF even moreso.  Since the DAF would have to return ill-gotten gains, they're involved.  Their lawyers will back you up.  The prosecutor is up against a billion dollar corporation instead of just you.  With Fidelity particularly, Bitcoin is a crusade for them, and their lawyers know how to defend Bitcoin.  A Fidelity DAF is a good play for that reason alone IMO.  ** The gory details: Presumably you are donating to regular charities or a Donor Advised Fund, and these are ""50% limit organizations"". Since it's capital gains, you have a 30% limit. If your donation is more than 30% of AGI, or if you have carryover from last year, you use Worksheet 2 in Publication 526. You plug your donations into line 4, then the worksheet grinds through all the math and shows what part you deduct this year and what part you carryover to the next year.  *** I specifically asked managers at two DAFs whether they were OK with someone donating a complex asset to the DAF, and immediately giving the entire cash amount to a charity.  The DAF doesn't get any fees if you do that.  They said not only are they OK with it, most of their donors do exactly that and most DAF accounts are empty.  They make it on the 0.6% a year custodial fee on the other accounts, and charitable giving to them.    Mind you, you can only donate to 501C3 type charities, what IRS calls ""50% limit organizations"".  This actually protects you from donating to organizations who lie about their status.  **** I'm not with Fidelity, but I am a satisfied DAF customer.  The DAF funds its overhead by deducting 0.6% per year from your giving account. If you invest the funds in a mutual fund within the DAF, that investment pays the 0.08% to 1.5% expense ratio of the fund.   I can live with that.  ***** I just Excel'd the value of donating $100 of appreciated security instead of taking it as capital gains income.  28% Fed tax, 15% Fed cap gains, 8% state tax on both.  Take the $100 as income, pay $23 in cap gains tax.  Donate $100 in securities, the $23 tax goes away since you didn't sell it. Really.  The $100 charitable deduction offsets $100 in income, also saving you $36 in regular income tax.  Net tax savings $59.  However you lost the $100!  So you are net $41 poorer.  It costs you $41 to donate $100 to charity.  This gets better in higher brackets." The only advantage of changing all your money now to the new currency is that you might get a better conversion rate now than later, so you get more of the new currency and you may pay a lower percentage fee for changing a larger sum of money. However, regarding the better conversion rate - you will not know this except with hindsight. The disadvantage of changing all at once is that if you have changed too much and need to change back to your own currency or a third currency, you will be charged fees and lose on the conversion rate twice. If you know how long you are going to be in the new country, say 12 months, maybe start by converting an amount you think you will be spending in a month. If you spend more then you can change a bit more the next month, or if you spend less change less the next month. If you find you are spending similar amounts for the next month or so, then you can budget on the amount you may be spending for the remainder of your stay and then convert this amount over. If you have a little left over at the end of your stay maybe reward yourself with something or buy a present for someone special back at home. If you need a little more, just convert this amount in the last month or so. "I have received a response from SIPC, confirming littleadv's answer: For a brief background, the protections available under the Securities   Investor Protection Act (""SIPA""), are only available in the context of   a liquidation proceeding of a SIPC member broker-dealer and relate to   the ""custody"" of securities and related cash at the SIPC member   broker-dealer. Thus, if a SIPC member broker-dealer were to fail at a   time when a customer had securities and/or cash in the custody of the   SIPC member broker-dealer, in most instances it would be SIPC's   obligation to restore those securities and cash to the customer,   within statutory limits. That does not mean, however, that the   customer would necessarily receive the original value of his or her   purchase. Rather, the customer receives the security itself and/or the   value of the customer's account as of the day that the liquidation   commenced. SIPC does not protect against the decline in value of any   security. In a liquidation proceeding under the SIPA, SIPC may advance   up to $500,000 per customer (including a $250,000 limit on cash in the   account). Please note that this protection only applies to the extent that you   entrust cash or securities to a U.S. SIPC member. Foreign broker   dealer subsidiaries are not SIPC members. However, to the extent that   any assets, including foreign securities, are being held by the U.S.   broker dealer, the assets are protected by SIPC. Stocks listed on the   LSE are protected by SIPC to the extent they are held with a SIPC   member broker dealer, up to the statutory limit of $500,000 per   customer. As I mentioned in the comments, in the case of IB, indeed they have a foreign subsidiary, which is why SIPC does not cover it (rather they are insured by Lloyds of London for such cases)." "The biggest and primary question is how much money you want to live on within retirement. The lower this is, the more options you have available. You will find that while initially complex, it doesn't take much planning to take complete advantage of the tax system if you are intending to retire early. Are there any other investment accounts that are geared towards retirement or long term investing and have some perk associated with them (tax deferred, tax exempt) but do not have an age restriction when money can be withdrawn?  I'm going to answer this with some potential alternatives. The US tax system currently is great for people wanting to early retire. If you can save significant money you can optimize your taxes so much over your lifetime! If you retire early and have money invested in a Roth IRA or a traditional 401k, that money can't be touched without penalty until you're 55/59. (Let's ignore Roth contributions that can technically be withdrawn) Ok, the 401k myth. The ""I'm hosed if I put money into it since it's stuck"" perspective isn't true for a variety of reasons. If you retire early you get a long amount of time to take advantage of retirement accounts. One way is to primarily contribute to pretax 401k during working years. After retiring, begin converting this at a very low tax rate. You can convert money in a traditional IRA whenever you want to be Roth. You just pay your marginal tax rate which.... for an early retiree might be 0%. Then after 5 years - you now have a chunk of principle that has become Roth principle - and can be withdrawn whenever. Let's imagine you retire at 40 with 100k in your 401k (pretax). For 5 years, you convert $20k (assuming married). Because we get $20k between exemptions/deduction it means you pay $0 taxes every year while converting $20k of your pretax IRA to Roth. Or if you have kids, even more. After 5 years you now can withdraw that 20k/year 100% tax free since it has become principle. This is only a good idea when you are retired early because you are able to fill up all your ""free"" income for tax conversions. When you are working you would be paying your marginal rate. But your marginal rate in retirement is... 0%. Related thread on a forum you might enjoy. This is sometimes called a Roth pipeline. Basically: assuming you have no income while retired early you can fairly simply convert traditional IRA money into Roth principle. This is then accessible to you well before the 55/59 age but you get the full benefit of the pretax money. But let's pretend you don't want to do that. You need the money (and tax benefit!) now! How beneficial is it to do traditional 401ks? Imagine you live in a state/city where you are paying 25% marginal tax rate. If your expected marginal rate in your early retirement is 10-15% you are still better off putting money into your 401k and just paying the 10% penalty on an early withdrawal. In many cases, for high earners, this can actually still be a tax benefit overall. The point is this: just because you have to ""work"" to get money out of a 401k early does NOT mean you lose the tax benefits of it. In fact, current tax code really does let an early retiree have their cake and eat it too when it comes to the Roth/traditional 401k/IRA question. Are you limited to a generic taxable brokerage account? Currently, a huge perk for those with small incomes is that long term capital gains are taxed based on your current federal tax bracket. If your federal marginal rate is 15% or less you will pay nothing for long term capital gains, until this income pushes you into the 25% federal bracket.  This might change, but right now means you can capture many capital gains without paying taxes on them. This is huge for early retirees who can manipulate income. You can have significant ""income"" and not pay taxes on it. You can also stack this with before mentioned Roth conversions. Convert traditional IRA money until you would begin owing any federal taxes, then capture long term capital gains until you would pay tax on those. Combined this can represent a huge amount of money per year. So littleadv mentioned HSAs but.. for an early retiree they can be ridiculously good. What this means is you can invest the maximum into your HSA for 10 years, let it grow 100% tax free, and save all your medical receipts/etc. Then in 10 years start withdrawing that money. While it sucks healthcare costs so much in America, you might as well take advantage of the tax opportunities to make it suck slightly less. There are many online communities dedicated to learning and optimizing their lives in order to achieve early retirement. The question you are asking can be answered superficially in the above, but for a comprehensive plan you might want other resources. Some you might enjoy:" Most inversion and tax sheltering deals like this are structured whereby their US division sends any profits to their offshore division as intellectual property licensing payments, or some form of financial instrument like inter-company loans, and the interest payments just so happen to be about as large as the US profits in that particular year.  Every time rules have been proposed to try and limit these sorts of arrangements, either they get killed in congress or additional loopholes are discovered and the same behavior continues. "A (very) simplified bond-pricing equation goes thus: Fair_Price: {Face_Value * (1 + Interest - Expected_Market_Return) ^ (Years_To_Maturity)} * P(Company_Will_Default_Before_Maturity) To reiterate, that is a very simplified model. But it allows us to demonstrate the 3 key factors that drive ""Fair"" Value: The interest relative to the current market rate. If your AAA bond yields 1%, but an equally-good AAA bond currently sells at 3% in the market, then the ""Equivalent"" value is the face value minus 2% (1% - 3%) for every year to maturity.  Years to maturity. Because 1) is multiplied for every year to maturity, longer-dated bonds are more sensitive to changes in market rates. If your bond yields 2% less than market but matures in a year, then it's worth $98, but if it matures in 56 years, then it's only worth 0.98^56 = $32. Conversely, if your bond yields more than the market rate, then its' price will be greater than face value. The company might default on the debt. If a Bond has a ""Fair"" Value of $100, but you think there's a 50% chance that the company will default, then it's only worth $50. In fact, it can be worth even less because getting paid on a defaulted bond can often take time and/or money and/or lawyers. In your case, because your bond matures in 56 years but yields ~5% (well above the current market rate), for it to be below Face value implies a strong probability of default, or a strong belief that market returns will be above 5% over the next 56 years." In this type of strategy profit is made when the shares go down as your main position is the short trade of the common stock. The convertible instruments will tend to move in about the same direction as the underlying (what it can be converted to) but less violently as they are traded less (lower volatility and lower volume in the market on both sides), however, they are not being used to make a profit so much as to hedge against the stock going up. Since both the bonds and the preference shares are higher on the list to be repaid if the company declares bankruptcy and the bonds pay out a fixed amount of interest as well, both also help protect against problems that may occur with a long position in the common stock.  Essentially the plan with this strategy is to earn fixed income on the bonds whilst the stock price drops and then to sell both the bonds and buy the stock back on the market to cover the short position. If the prediction that the stock will fall is wrong then you are still earning fixed income on the debt and are able to convert it into stock at the higher price to cover the short sale eliminating, or reducing, the loss made on the short sale. Effectively the profit here is made on the spread between the price of the bond, accounting for the conversion price, and the price of the stock and that fixed income is less volatile (except usually in the junk market) than stock. Interest rate swaps are used to transfer risk from one party to another. They can be used to transfer many types of risk but most common are interest rate risk and exchange rate risk  There are a few key concepts that I have noticed most people have trouble with which Are below:  1) The Notional amount: this is the amount that the two legs (the floating and fixed) will be based on. If you think about each leg as a loan the notional amount would be the principal, however in a swap this amount never changes hands. Rather it is just an amount used to calculate what the dollar amount exchanged should be.   2) The floating and fixed legs are the interest rates that will be exchanged. The fixed leg will always pay out the same amount no matter the changes in the market while the floating rate will change periodically depending on market conditions. As a side note it is often agreed that only the difference in the two rates will be paid rather then sending the money back and forth.   3) And finally it is important to note that at the inception of the swap the notional value will always be 0. Many people miss this but when you think about it no company would want to sign a deal the from inception puts them in a loosing position.   I hope that helped without a more specific question all I can do is list random facts about swaps and hope they are useful to you.