I have been writing covered weekly OTM Calls against MSTR, usually collecting an average of 10 points/week. That served me well this year. Even though the reduction on cost basis helped it was very stressful at times. I had this problem with extreme volatility. When the price shoots above the strike price I had been waiting for the call to expire hoping the MSTR price goes near the strike price. When the price goes well above the strike I lose opportunity and WORST if the price goes far below the strike I have a loss. I do not have a good defensive mechanism when the underlying goes a lot either above or below the striking price. The only defense I have is having a position that I am comfortable with, finding a balance between premium and probable expected weekly range of MSTR. Sometimes I buy way out of the money calls and puts preventing a big catastrophe. Usually, I wait until expiration and this sometimes can be very costly. Any ideas?
1. Have you considered an underlying with lower volatility? 2. You also have a problem with repeating the same question and ignoring answers. Did you consider the approach outlined in my first response to you on your other virtually identical thread? It feels like you are just trying to waste everyone's time.
aplino, I'm working with MSTR, too. I'm rolling the DITM Long Vertical Calls. I'm not getting 10 points, or even close to that, but I don't have your downside risk. That would scare me.
Learn better market timing, using simple 21 ma, wait for upsloping sma, when it retraces to sma = sell puts otm, trend is your friend.
Why are you buying way out of the money calls to prevent catastrophe on a covered call / synthetic put?? Makes zero sense.... good thing you arent trading a high priced volatile stock
**** not financial advice, for entertainment purpose only **** If anyone is trading mstr, they should at least have a way to value it. the call options Dec 2025 strike 800 are priced at over 30% of current stock price and also over 100% out of the money... What should be the price (or market cap) of a stock that is the most profitable US public company, earning about $1B of profits per month ytd? (btw, it will be higher by eoy, as the current mstr operations is in full swing, ATM and convertible debt, there will be another announcement this morning) The stock market is blind to what mstr is doing, they are wired to think PNL, a company buys from suppliers ,say magic-widget for $100, and sells magic-widget to consumers for $140 and they think it's a great business, 40% gross margin, ebitda of 20% whatever mstr sells and then buys, a reverse process, but profits is realized immediately, mstr sells ATM shares and buys bitcoin, mstr sells convertible debt and buys bitcoin, and immediately, profits are realized, due to the cost of capital and current market price of bitcoin no waiting for new production plant, or shipment from suppliers, or R&D of new products https://www.elitetrader.com/et/thre...-by-michael-saylor.382091/page-2#post-6062429 the chairman of mstr went on CNBC to explain the billions of $ in profits the company is making, no disclosure statement forward looking, because it happened already (5 minute mark on the video) When will the stock market wake up to mstr? on the next earnings release, mstr will start incorporating the billions of $ of profits on their bitcoin treasury asset, per the FASB GAAP rule change effective 12/15/2024 Berkshire is in a similar business, but the difference is that mstr uses bitcoin and only bitcoin as their treasury asset
Dude, retail has been borrowing off bitcoin to buy more bitcoin since crypto lending sites hit the scenes back in 2018... You post these like MSTR has come up with some new strategy lol. Anyway, everything falls apart if price drops substantially. MSTR convertibles are unsecured, so no liquidation risk due to margin, but they still have to pay out these loans if price drops below the strike prices...or default. Also, how many convertibles and at what price can they sell in an extended downturn? They will have to raise money to pay out the bonds, either buy selling bitcoin, possibly at a loss due to increasing their break even constantly...or they will have to release shares.