Bitcoin holding company Strategy (MSTR) is up 237% over the past year, far exceeding the overall stock market’s return. One trader sees further upside in the coming weeks as bitcoin potentially makes another run at $100,000.
That’s based on the June 20 $390 calls. With 46 days until expiration, 62,889 contracts traded compared to a prior open interest of 1,262, for a 50-fold rise in volume on the trade. The buyer of the calls paid $41.50 to make the bullish bet.
Strategy shares last traded near $390, making this an at-the-money trade. Shares are well of their 52-week high of $543, but have come off of lows near $250 in the past month.
Strategy not only holds over 2% of all bitcoin, but continues to use tools like preferred shares and debt to add to its holdings. There is a legacy intelligence business that provides cash flow to cover that debt.
Action to take: Long-term investors with an interest in bitcoin may like Strategy as an alternative to buying, holding, and storing bitcoin for convenience. However, shares have become volatile by design, so buyers of shares will want to periodically take some risk off the table by selling after a big run.
For traders, the June $390 calls are well positioned for the current trend higher in Strategy and bitcoin. More risk-averse traders may want to go further out to give bitcoin more time to keep rallying.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.