Options traders are dramatically increasing their bearish bets against Michael Saylor’s MicroStrategy (MSTR) and its preferred stock (STRC) as Bitcoin plunges below $60,000. Significant put buying activity, partly driven by funds like WNTR, indicates a growing ‘Michael Saylor risk factor’ is being priced in, especially as rising interest rates add further pressure to crypto-related investments.
VIDEO: 1:41 Options flow shift bearish on crypto related stocks
Options traders are aggressively betting against Michael Saylor, MicroStrategy's outspoken Bitcoin evangelist, in what some are calling a 'mutiny on Strategy.' This surge in bearish sentiment targets both MicroStrategy's stock (MSTR) and its variable-rate preferred stock (STRC) as Bitcoin experiences a significant downturn.
VIDEO: 1:41 Options flow shift bearish on crypto related stocks - Options Action
Friday saw more than double the number of puts traded compared to calls for MicroStrategy, with put purchases outnumbering calls by more than three-to-one. The trading volume was nearly triple the daily average for the past month. Out of $335 million in premium traded, a significant $250 million was allocated to puts, indicating a strong bearish conviction.
A notable portion of this put buying activity is linked to spread strategies employed by the YieldMax Short MSTR Option Strategy ETF (WNTR). This fund actively shorts MicroStrategy stock while generating income through put spreads. Since May 11, WNTR shares have climbed 30% as MSTR has faced headwinds.
Strategy, YTD Performance
The bond-like preferred stock, STRC, which Saylor once touted as 'digital credit' and an alternative to money market funds, dipped 3.6% on Thursday, reaching its lowest price since November of the previous year ($92). David Dziekanski, CEO of Quantify Funds, highlighted an increasing 'Michael Saylor risk factor' being priced into STRC. Dziekanski pointed to Saylor's shift from his initial strategy of avoiding Bitcoin sales by using cash from the balance sheet to buy back bonds, only to later sell Bitcoin. This has led to expectations for a significantly higher yield to restore STRC's price to par.
Strategy Inc., YTD Performance
While options volumes for STRC were moderate at just over 6,000 contracts, the dominant directional trades involved selling calls and purchasing puts, according to ThinkOrSwim data. A broader selloff in Treasury bonds and rising yields, spurred by stronger-than-expected employment data on Friday morning that pushed rate-hike odds above 40% (CME's FedWatch tool), are further pressuring these instruments. Historically, crypto prices have struggled in environments of rising interest rates, particularly impacting credit instruments like STRC.
Adding to the crypto market woes, Bitcoin plunged below $60,000 on Friday for the first time since late 2024, intensifying the bearish sentiment across crypto-related assets.
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