MSTR as a defined-risk trade for asymmetric risk-reward

[johnarb]

John's call was a very good one, but it's still n = 1, so it's hard to say if there's any skill involved if we are to be completely honest.

Implying johnarb is a lucky n=1 is much too dismissive. There was a ton of work behind that call. And it’s not like he made that call and disappeared for 2 years.

You sound bitter sweetheart. You called him a "rude fuck and lucked out", so I presented evidence to the contrary. He called the price, to almost the exact date. It wasn't luck that got him where he is.

Its interesting to me that when we ourselves are correct,we tend to call it research,conviction,foresight etc.When its someone else,we tend to be sure its dumb luck.

This first post is for a background, if not interested, go to the next post for the details on the thread title

It seems my reputation is a one-hit dumb luck, unskilled trader-investor, and that's fine by me, I have nothing to prove, but I do have my trades publicly posted on here

I trade unconventional, which is to say I'm not an active trader looking at chart patterns

I look for trade-potential, and then I'll put the trade if I believe it's worth putting a risk-capital and that the payoff is "high enough"

It's easier for ET to understand my strategy using options,

but in the middle of a bull market in crypto it's better to use crypto assets as there's no expiration to deal with, nor other greeks

In a crypto winter, it's pretty much guaranteed a losing strategy...

So, I start with a premise that a trade has a potential for a high reward, and the starting point is a (subjective) "low" market cap, and a target (potential) market cap

Imagine a distribution of outcomes, pick the high point and see if that is worth losing your defined risk-capital if the low point happens

A long time ago, I remember a thread by atticus on touch no touch

• Defined risk - set amount of capital at risk, i.e. $7k to $30k
• Profit target based on the high-point of probability distribution of outcomes
• The key is to hodl to see the trade through
• Happens a lot that a big profit can turn into a loss... acceptance of this risk

Pepe about a month after the trade was initiated

https://www.elitetrader.com/et/threads/is-the-crypto-winter-over.372152/page-92#post-5806098

I traded all my Pepe last year on the way down, during a crypto doldrum such is life

50 Billion Pepe is worth $600k as of today, it hit a high point a few weeks ago and was worth over $800k

Also giving a shout-out to @johnarb for being an unwavering cheerleading maxi in this forum. His older posts got me interested and while my returns aren't stellar by any means, my BTC profits have funded several years of living expenses.

Bitcoin is not a trade for me at this point. It's a life-savings, unit of account

In a world where everything is abundant, especially fiat, Bitcoin should go up forever in value against all other assets especially fiat

 

[NoahA]

It seems my reputation is a one-hit dumb luck, unskilled trader-investor, and that's fine by me, I have nothing to prove, but I do have my trades publicly posted on here

The funny thing is that after watching to many videos, I learned much of the early guys cashed out and then went on to do other things. Rarely did someone hold for so many years. If anything, its not dumb luck, its more like stupidity if you got in at $1 and still holding... LOL

Of course now we know that bitcoin is moving in these cycles, but in 2011, 2012, 2013, nobody had really any idea. It might have easily died.

So I completely agree that its not dumb luck to have made so much money from bitcoin and crypto. Dumb luck is buying options before earnings on popular stocks, but taking a risk on bitcoin and waiting for a 100x is a little bit luck, but a huge amount of perseverance.

I understand why you keep swearing at everyone. To hold through an 80% drawdown means that you have studied bitcoin so deeply, and understand the proposition so clearly of what it will accomplish, that holding seems like the right play. For all those people who are smart and can claim they got out at the top and bought back in at the bottom, there will be just as many to have gotten out, and never back in. I see this alot in those podcasts. The early guys made a 2x or 5x, and then walked away.

In 2017, during the forkwars, it sounds like things got pretty bad and bitcoin could have died, so this was yet another huge risk. You could have followed the wrong chain, converted all your coins, and have been left behind, or maybe just have gotten out. So I understand why you're trying to keep telling people to just focus on the pot at the end of the rainbow, even though its getting very difficult sometimes.

To be honest, I do wonder if its still a bull market. I think the chance for a significant pullback right now is there. I know we are all waiting for an omega candle, and that can easily happen with a supply shock or major announcement around some country adopting bitcoin, but every single day that the macro environment gets worse, I see that bitcoin is getting sold off first. (I watch too many doom and gloom videos, but the stats are there to show major deterioration in many metrics) I have no doubt that bitcoin is currently the only solution to fix the monetary system, so long term, if you have no bitcoin, you're essentially short bitcoin as they say, but in the short term, I'm worried the macro environment is going to have a negative effect on this bull market.

 

[johnarb]

John's call was a very good one, but it's still n = 1, so it's hard to say if there's any skill involved if we are to be completely honest.

Implying johnarb is a lucky n=1 is much too dismissive. There was a ton of work behind that call. And it’s not like he made that call and disappeared for 2 years.

You sound bitter sweetheart. You called him a "rude fuck and lucked out", so I presented evidence to the contrary. He called the price, to almost the exact date. It wasn't luck that got him where he is.

Its interesting to me that when we ourselves are correct,we tend to call it research,conviction,foresight etc.When its someone else,we tend to be sure its dumb luck.

MSTR call options

If I say I turned $77k to over $750k, it will be called dumb-luck n=2 from Johnny...

If I expand that it was over a 2.5 year period.... and that it involved 5 trades, maybe it will get some consideration?

• How about if the very first trade was a loss of $50k risk-capital? Ok, it's gotta be additional point, no?

https://www.elitetrader.com/et/threads/bitcoin-and-mstr-price-correlation.362726/page-6#post-5525146


$27k to over $750k in the next 4 trades

• So 2nd trade (open) and 3rd trade (close) was in a bear market, MSTR call leaps, $27k to $60k

I held this trade through a 100% profit, down to 90% loss (at the low the position was worth less than $3k) and closed it at about $60k. This is what I meant above on being able to hodl through the position volatility


https://www.elitetrader.com/et/threads/crypto-macro-trends-for-2022.363931/page-29#post-5613148

https://www.elitetrader.com/et/threads/crypto-macro-trends-for-2022.363931/page-89#post-5910696

• 4th trade (open) and 5th trade (close) $40k to over $750k, closing trades happened in 2 tranches

https://www.elitetrader.com/et/threads/crypto-macro-trends-for-2022.363931/page-89#post-5913024

If I'm correct, this current options position could go from $6.5k (lowest) to $1M (highest) in 1/3rd of the time, 6 months (15,000%)

3 times bigger move in 1/3rd the time, sound doable

That would be wild, lol, putting it on here coz no one would believe it if it happens when bitcoin goes to $100k within 6 months and the second order effect on the MSTR share price

View attachment 332879

On this post above, position was worth $12k and grew to over $1M in 2 months, sold 3 call options (first tranche)

2nd Tranche sell-to-close for the remaining options was 2 weeks ago

Update: the mstr calls options position hit over $1M m2m value today as mstr hit $1,999/share today

---------------------------------------------------

Happy Father's day to all

**** NOT FINANCIAL ADVISE ****

So now, the title seems like a click-bait... but wait, there's more

• defined risk capital = $15k to $30k = 10 to 20 shares of MSTR
• Within 7 years $500K-$1M/btc
• MSTR bitcoin treasury asset will be worth $100B+ to $200B+
• Within that time frame, MSTR will continue to issue convertible debt to buy more bitcoins or issue more shares to buy more bitcoins
• FASB rule allows for profit on the bitcoin position
• MSTR to $50k-100k (split adjusted) resulting in those 10-20 shares of MSTR to be worth $500k-$2M

 

[zdreg]

foreve

Eliminate the word forever from your vocabulary.

 

[wxytrader]

This first post is for a background, if not interested, go to the next post for the details on the thread title

It seems my reputation is a one-hit dumb luck, unskilled trader-investor, and that's fine by me, I have nothing to prove, but I do have my trades publicly posted on here

I trade unconventional, which is to say I'm not an active trader looking at chart patterns

I look for trade-potential, and then I'll put the trade if I believe it's worth putting a risk-capital and that the payoff is "high enough"

It's easier for ET to understand my strategy using options,

but in the middle of a bull market in crypto it's better to use crypto assets as there's no expiration to deal with, nor other greeks

In a crypto winter, it's pretty much guaranteed a losing strategy...

So, I start with a premise that a trade has a potential for a high reward, and the starting point is a (subjective) "low" market cap, and a target (potential) market cap

Imagine a distribution of outcomes, pick the high point and see if that is worth losing your defined risk-capital if the low point happens

A long time ago, I remember a thread by atticus on touch no touch

• Defined risk - set amount of capital at risk, i.e. $7k to $30k
• Profit target based on the high-point of probability distribution of outcomes
• The key is to hodl to see the trade through
• Happens a lot that a big profit can turn into a loss... acceptance of this risk

Pepe about a month after the trade was initiated

https://www.elitetrader.com/et/threads/is-the-crypto-winter-over.372152/page-92#post-5806098

I traded all my Pepe last year on the way down, during a crypto doldrum such is life

50 Billion Pepe is worth $600k as of today, it hit a high point a few weeks ago and was worth over $800k




Bitcoin is not a trade for me at this point. It's a life-savings, unit of account

In a world where everything is abundant, especially fiat, Bitcoin should go up forever in value against all other assets especially fiat

Yeah Desterio said tell me what Mara will be at the end of January and I'll make you rich. I nailed it. You can look it up. Haters be haters. I didn't see anybody here calling for Bitcoin to move early this year during the ftx scandal...but that's ok because that's why 99% of traders don't make money. You have to see the opportunities and pounce. I missed the first GameStop rally. I wasn't going to miss the second one. So instead of coming on here and complaining about blah blah hype meme b******* I made 16k on a single 2 day trade.

 

[Sprout]

Yeah Desterio said tell me what Mara will be at the end of January and I'll make you rich. I nailed it. You can look it up. Haters be haters. I didn't see anybody here calling for Bitcoin to move early this year during the ftx scandal...but that's ok because that's why 99% of traders don't make money. You have to see the opportunities and pounce. I missed the first GameStop rally. I wasn't going to miss the second one. So instead of coming on here and complaining about blah blah hype meme b******* I made 16k on a single 2 day trade.

Dec 30th, 2023
https://www.elitetrader.com/et/thre...ghest-implied-vola.377672/page-2#post-5908548

post on Apr 9th, 2024

 

[traider]

Yeah Desterio said tell me what Mara will be at the end of January and I'll make you rich. I nailed it. You can look it up. Haters be haters. I didn't see anybody here calling for Bitcoin to move early this year during the ftx scandal...but that's ok because that's why 99% of traders don't make money. You have to see the opportunities and pounce. I missed the first GameStop rally. I wasn't going to miss the second one. So instead of coming on here and complaining about blah blah hype meme b******* I made 16k on a single 2 day trade.

Well done what's your next call?

 

[johnarb]

Down 75% $30k m2m.... but got lots of time on this trade

Looking ahead, if bitcoin can get above $100k within 6 months, I believe this MSTR calls options position will be worth a few hundred thousand $

Just need the bitcoin spot etf's to start getting strong inflows to absorb the gbtc selling, which might take months


View attachment 331687

• Conviction in a trade idea

How many people in here would put $40k in a trade and within 7 days lose $30k or 75% m2m and and not be tempted to sell when it goes to break-even or even get profits like 100%, 200%, 300%?



Can you hold the volatile position that has gone down 75% within 7 days worth a measly $10k and hold it through the volatility until it hits over $1M to lighten up the position?

• Conviction

 

[The_Krakenite]

Conclusion

While MicroStrategy's pivot to Bitcoin initially yielded significant gains and attracted market attention, the recent decoupling of its stock price from Bitcoin's value signals a significant overvaluation of its software business. Despite being profitable, MicroStrategy's software business has not had significant growth or fundamental change warranting such an increase in its valuation. With insiders selling a large volume of shares in the past several months and the potential liquidity issues surrounding its Bitcoin holdings, the current valuation appears unsustainable. As a result, I recommend a "Sell" on MicroStrategy's stock at this time.

https://seekingalpha.com/article/46...vel_url:market-outlook|section:content|line:4

 

[johnarb]

**** NOT FINANCIAL ADVISE ****

• defined risk capital = $15k to $30k = 10 to 20 shares of MSTR
• Within 7 years $500K-$1M/btc
• MSTR bitcoin treasury asset will be worth $100B+ to $200B+
• Within that time frame, MSTR will continue to issue convertible debt to buy more bitcoins or issue more shares to buy more bitcoins
• FASB rule allows for profit on the bitcoin position
• MSTR to $50k-100k (split adjusted) resulting in those 10-20 shares of MSTR to be worth $500k-$2M

**** NOT FINANCIAL ADVISE ****

I have an active trade, but it's a 2-part trade, a planned parlay bet

If I purchase 100 MSTR shares today (or on the day of the thread OP) and hodl for 5-7 years, until it's worth $10M when MSTR/$100k...

I would end up with no active trade for next 18 months, no income, no fiat cash to collect next year

.... during the scheduled peak of the bull market in Bitcoin

So instead, I put a trade, a bet, buy an options position risk capital = $160k,

if I'm correct that MSTR will hit $7/k within the next 18 months, I will collect over $1M in fiat profits and purchase 100 shares of MSTR for $700k to hodl for the next 5-7 years until worth $10M

• That's my defined risk-trade(s) for asymmetric reward-reward

As seems to happen often, my position is down a bit, but I gots lots of time...