Technology company MicroStrategy (MSTR), best known for holding a massive amount of bitcoin, is up 250% over the past year. One trader sees shares trending higher in the months ahead.
That’s based on the October 18 $139 calls. With 64 days until expiration, 29,760 contracts traded compared to a prior open interest of 115, for a 259-fold rise in volume on the trade. The buyer of the calls paid $21.05 to make the bullish bet.
MicroStrategy recently traded at a post-stock-split price of $136. Shares would need to rise by $3, or 2.2%, for the options to move in-the-money.
Shares have a 52-week high of $200 on a split-adjusted basis, so are well off this high as bitcoin prices have traded in a range over the past few months.
MicroStrategy’s operating company has been a poor performer over the last 12 months, with revenues sliding by 7%.
Action to take: MicroStrategy is essentially a proxy trade on bitcoin prices. The cryptocurrency’s price should increase over the next 12 months, and today’s buyers of shares should see a gain. However, there will be extreme volatility in the price along the way.
For traders, the October $139 calls are an inexpensive way to bet on a big move higher on bitcoin prices over the coming weeks. If such a breakout happens, the calls could see high double-digit returns or higher.
Disclosure: The author of this article has a position in the company mentioned here, and may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
