Convertible bonds what happen to option

eg. A co issues 2000 convertible bonds at the start of 20x2. The bonds have 3 year term. And are issued at par with face value $1000 per bond , giving total proceeds of $2,000,000. Interest is payable annually in arrears at a nominal annual interest rate of 6%. Each bond is convertible at any time up to maturity into 250 common shares. When bonds are issued, the prevailing market interest rate for similar debt without conversion options is 9%. At the issue date, the market price of one common share is $3. Debt 9%discount 120*0.917+120*0.842+2120*0.772= 1848. Equity= 2000-1848=152 On issue: Dr bank 2000 Cr NCL 1848 Cr Equity- option reserve 152 ( I understand,but can't understand the following) what happen to option( after 3 years) 1. if share price is $3. Redeem the debt. not convert Dr convertible debt 2000 Cr Bank 2000 Dr option reserve 152 Cr Acc profit 152 2. if share price is $5 , convert Dr convertible debt 2000 Dr option 152 Cr Share capital 2152 Can you help me to understand this two options' double entry? I mean, if not convert, all paid in cash. why still have dr option reserve, cr acc profit? if convert, all debt part 1848 also convert to shares? Thank you.