No. of Recommendations: 3
Do they have to notify ahead of time of calling?
Do they give a day's notice? month? etc...
Are there rules for that?

Did you read the prospectus to find if there were any notification period requirements for a call? That would be the governing document.

If you type Lehman into the search box on quantumonline and click on 'symbol lookup' you will get a list of Lehman ABS related securities. Many of the grayed out ones are 3rd party trust preferreds that have been called, and you can go look at the call terms by clicking on each one. By doing some random clicking I was able to find call notification periods with significantly different lengths.

So, if you had bought XKO at yesterday's close of $10.99 and there was a notification today that the stock was being called, you would probably suffer an immediate $0.99 loss, offset by, at most, $0.19375 in interest payments, if the call date was coincident with the next dividend payment date. So, the effective 7.05% income stream is offset by the potential of an $0.80 - $0.99 loss per share.

Buying trust preferreds above their call price introduces additional downside risk, in addition to diluting the effective yield compared to the coupon rate. Are you willing to take on that risk?

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