Options traders are aggressively placing bets against Michael Saylor, the prominent evangelist for cryptocurrency, and his company, MicroStrategy. This surge in bearish sentiment marks a significant 'mutiny on Strategy' as investors anticipate further declines for the company deeply tied to Bitcoin.
Trading activity around Saylor's MicroStrategy (MSTR) and its variable-rate preferred stock, STRC, has turned distinctly bearish this week. This follows a month of more balanced trading, despite a consistent drop in Bitcoin prices that began in mid-May.
On Friday, put options outnumbered calls by more than two-to-one for MicroStrategy, and the volume of purchased puts was three times that of calls, nearly tripling the daily average over the past month. Out of $335 million in total premium traded, a substantial $250 million was directed towards put options.
A significant portion of this put-buying activity is linked to spread strategies employed by the YieldMax Short MSTR Option Strategy ETF (WNTR). This fund specializes in shorting MicroStrategy stock while generating income through put spreads. WNTR shares have climbed by 30% since May 11, reflecting MicroStrategy's recent struggles.
Strategy, YTD
Meanwhile, STRC, the bond-like preferred stock that Saylor once touted as 'digital credit' and an alternative to money market funds, dipped 3.6% on Thursday, reaching $92—its lowest price since November of last year.
David Dziekanski, CEO of Quantify Funds, noted the increased 'Michael Saylor risk factor' being priced in. He highlighted Saylor's pivot from describing STRC as a way to avoid selling Bitcoin to instead using cash to buy back bonds and subsequently selling Bitcoin. Dziekanski believes STRC will now require a significantly higher yield to return to its $100 par value.
Strategy Inc., YTD
Though STRC options volume was modest, with just over 6,000 contracts, the dominant directional trades involved selling calls and buying puts. The broader market environment, marked by a selloff in Treasury bonds and rising yields, further exacerbates the pressure. Following strong employment data on Friday morning, the odds of a rate hike this year have risen above 40%, according to CME's FedWatch tool. Historical data shows that crypto prices often struggle during periods of increasing interest rates, which particularly impacts credit instruments like STRC.
The cryptocurrency market also saw Bitcoin break below the $60,000 mark on Friday, its first time doing so since late 2024.
