MicroStrategy Options Hedge Risk of 96% Drop After Bitcoin Rout

 
image

(Bloomberg) — Few companies are tethered as closely to Bitcoin as MicroStrategy Inc., a software company that’s plowed its profits and borrowed money into the cryptocurrency.

Shares of the Tysons Corner, Virginia-based company have tumbled alongside Bitcoin, dropping more than 50% since the end of March to around $230.

Yet options activity shows some investors are eager to protect against — or bet on — an even deeper hit. Some of the most active options traded Tuesday were puts with January expirations that give the owner the right to sell the stock at $40, $20 and even $10. There had been no open interest in those contracts before.

Such extreme bets could be from someone hedging a long position in the stock or in Bitcoin. But they amount to bets on a further drop of around 80%, 90% or 96% from current levels, respectively.

Shares of MicroStrategy, whose Chief Executive Officer Michael Saylor is regarded as a top Bitcoin evangelist, are often used as a proxy for the cryptocurrency given how heavily the company has tied its fortunes to it. MicroStrategy’s stock market capitalization has broadly mirrored the value of its Bitcoin holdings.

©2022 Bloomberg L.P.

 
Trending Ideas

Featured Stocks On The Move

Daily Rundown

Top 3 Stocks in Leading Sectors
  • 3 Audio & Video Product Stocks To Buy Now

    Koss Corporation (KOSS) Koss Corporation designs and manufactures high-quality headphones, focusing on delivering superior sound performance. The company offers a range of products catering to audiophiles, professionals, and everyday users,... Read More

  • 3 Software Stocks To Buy Now

    Similarweb Ltd. (SMWB) Similarweb Ltd. provides a digital intelligence platform that offers insights into web traffic, online performance, and market trends. Businesses use its tools to optimize their online presence,... Read More

  • 3 Financial Transaction Service Stocks To Buy Now

    Global Blue Group Holding AG (GB) Global Blue Group Holding AG specializes in providing tax-free shopping and payment services for international shoppers. The company facilitates smooth refund processes and innovative... Read More

  • 3 Medical Stocks To Buy Now

    Qudian Inc. (QDDEL) Qudian Inc. operates a consumer finance platform in China, providing small loans and credit products to underserved consumers. The company leverages data analytics and technology to streamline... Read More

  • 3 Electric Power Stocks To Buy Now

    Empresa Distribuidora y Comercializadora Norte S.A. (EDN) Empresa Distribuidora y Comercializadora Norte S.A. (EDN) distributes electricity to Argentina’s Buenos Aires region. The company focuses on reliable energy supply, infrastructure upgrades,... Read More

  • 3 Investment Brokerage Stocks To Buy Now

    Robinhood Markets, Inc. (HOOD) Robinhood Markets, Inc. operates a financial services platform offering commission-free trading in stocks, ETFs, and cryptocurrencies. Known for its user-friendly mobile app, the company focuses on... Read More

  • 3 Consumer Service Stocks To Buy Now

    FAT Brands Inc. (FAT) FAT Brands Inc. is a global franchising company that develops and manages a portfolio of fast-casual and casual dining restaurant brands. Known for its diverse offerings,... Read More

  • 3 Safety Stocks To Buy Now

    Digimarc Corporation (DMRC) Digimarc Corporation develops innovative digital watermarking and content identification technologies. Its solutions enhance product packaging, digital media, and supply chain transparency, providing companies with tools for brand... Read More