What about now, you ask? Good question, considering the call isn’t quite as easy. Let’s say, for instance, that between today and the bonds’ maturity in May 2012, the stock goes to $40 -- roughly a 35% gain from today.

The bonds would only appreciate to par (100), for a capital gain of less than 10%. That doesn’t look too good when compared with the upside participation the bonds experienced in the stock’s upside over the past 6 months.

But you don’t buy convertible bonds when you feel confident of steady, reliable gains in common stocks. You buy them because you know the words “steady, reliable gains” and “common stocks” don’t even belong in the same sentence. You know there’s a lot of fear, greed, and noise out there.

Remembering the stock is just below 30, let’s say it could be at either $60 or $15 when the bonds mature. (This better captures the volatility we’ve all come to expect, although it certainly allows for outcomes in between.) If the stock doubles to $60, the bonds will be worth over $140 at maturity. That’s a gain of well over 50% over the 3 years -- and that’s without coupon income.

If the stock halves to $15, the bonds will still pay off at 100. That’s a total return of better than 5% annually between coupon income and capital appreciation -- a 5% return for being pretty wrong about the stock.

So if you’re worried about timing, but want to give yourself the chance for meaningful appreciation, the convertibles are still very attractive. With a modest (but positive) return if you’re very wrong and an even better return if you’re right, a worst-case outcome (other than bankruptcy) is assured from the outset.

A choice like that deserves consideration.

Postscript: Just minutes after completing this article, Amerigroup released updated first-quarter numbers indicating that costs associated with outpatient care would be higher than previously expected. This  is exactly the kind of thing that makes timing stocks tricky -- and that makes buying convertibles, wherein you have more control over your exit strategy (provided you're prepared to hold for the longer term), so attractive.