MSTR as a defined-risk trade for asymmetric risk-reward

It seems fantastical that they found someone to underwrite a LOC at 5 handles under Prime AND unsecured. I don't get it.

Now, there are a bunch of other sources of delta that are far less costly. Why MSTR instead of ETF vol? Why take risk of failure over buying spot?

 

I'm sorry, should have prefaced with I read/heard...

I'm unqualified to understand the terms of the loan, but others have done so and made those statements

The terms of the debt convertible offerings do not stipulate liquidation of bitcoin treasury to meet the loan obligations, which probably means they could be forced to do so in a bankruptcy scenario

But even in the darkest times of bitcoin bear market, I read/heard that mstr was nowhere near being insolvent

"interest only, until maturity, mstr does ATM when share price has been high to retire old debt or force converts as allowed in the terms"

 

For a brief time today, and yesterday I was debating on going long again on MSTR. But instead decided to short more puts on CleanSpark.

I also went flat on Truth Social to lock in profits. Far too much risk carrying that over the next few days.


Will be watching the vix more carefully.

 

There is no way that the terms read <1% and unsecured.

You're referring to the converts?

 

The converts are collateralized (2029 repurchase agreement).

 

mstr debt convertibles are the best performing public company debt in the US stock market

All the top performing bond funds have mstr debt

120% price appreciation , like a tech stock that's why oversubscribed every single offering and the $21B over 3 years is a message to the future buyers

So I heard/read, not qualified to do bond analysis

 

collateralized with mstr shares, not bitcoin treasury asset, as I understand it....

 

That's great, but the buyers receive Par, regardless... or they default in that scenario. They are not unsecured and it's the optionality which makes the coupon silly.

Enough of that, what does MSTR add other than leverage? Leverage you can trade in other, cheaper products?

 

Understood but 100% of their mcap is due to their BTC-holdings. Obviously the risk of default is a nearly 100% corr to BTC spot price. Nobody is valuing MSTR on the opco.

 

yes, the optionality (call options) to the buyers, the hedging as the price of mstr shares go higher

mstr offers volatility to all the market participants

to the buyers of equity, to the buyers of debt, to the shorts as well

It was in that video, I posted a few pages back, I know it's long but can be sped up 2x on the settings

PS: It's on this video Saylor said mstr is able to borrow at less than 1% unsecured