MSTR -- To get out or not...

johnarb said:
Thank you very much, Heroic!!!!

I believe there's a few reasons why mstr is trading at a premium
  • European countries unable to invest in the bitcoin spot etf's ,but able to with mstr
  • Bond funds able to ape into mstr debt offerings and becomes a reflexive loop when performance of the bonds outperform even hot tech stocks within a couple of weeks time
  • Bitcoin maxis buying mstr as a leverage position
  • Other equities-only investors seeing mstr as a leverage investment to btc versus bitcoin spot etf's, the former has no fees and can borrow and/or issue stocks to increase the btc holdings vs the latter that do not have the same capabilities
  • The possibility of mstr being added to the s&p 500 and the mstr price is trading in anticipation of the news
The next 60 days is a good time period for mstr to hit $3k or higher

After the halving in a month, bitcoin could rally to much higher price and if gbtc continues its big outflows, it could be completely out of bitcoins within 2 months or at least at a very small btc holding that it's an insignificant seller

just some random thoughts but I have mental plans to help me get through the mstr volatility of the next 60 days
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Forgot the biggest reason that mstr is trading at a premium to their btc holdings value, nav

When TradFi looks at mstr btc holdings of 214k btc and they look at the price of btc and say oh it's worth $15B...

That is wrong. I would capitalize it and put exclamation, but it doesn't matter, since it only makes sense if you understand

It is impossible for anyone (except a govt), individual, group, or company or a sovereign wealth fund to acquire 214,000 bitcoins at a cost of $15B

Blackrock understands this, Fidelity understands this, all the bitcoin spot etf issuers understand this, Mr 100 understands this, Apple understands this, Google understands this, a sovereign wealth fund understands this, all the bitcoin miners understand this....

If you understand this, you would know that the mstr holdings of 214,000 bitcoins is worth much more than $15B and it goes up as the price of bitcoin goes up, hence the premium



https://twitter.com/search?q=mr 100&src=typed_query
 
llIHeroic said:
Glad to see your position bounced back. I'll be honest john I will feel relieved when you are in BTC instead of MSTR but your conviction here is what got you all these unrealized gains in the first place so I hope that keeps up for you until your exit.
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Very much appreciate the good wishes!!!!

I've finally cashed out some, over 600% roi on risk capital, I still have most of the mstr call options, planning to hold for 60 days

johnarb said:
just some random thoughts but I have mental plans to help me get through the mstr volatility of the next 60 days
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Above action of selling a few to take out the emotional roller-coaster due to the mstr volatility for the next 60 days

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Very bullish video on mstr below... my key takeaway is the idea of liquidity (sustained high trading volume) because of the convertible debt issuance

If the price of mstr stays high or keeps going higher, it will attract more buyers causing the price to continue going higher, a reflexive loop Veblen effect


 
johnarb said:
This is very good news for mstr!

https://twitter.com/x/status/1773337285062172793
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I have no opinion of the short MSTR/long bitcoin trade, but I am in the middle of that recent episode with Preston on MSTR that you link above, and I have to say, I'm a bit uncomfortable with how excited him and his guest are about getting yield and explaining that this is one good way to get yield on bitcoin. They seem to glorify the potential of being able to lend out your bitcoin, and hence never having to sell it, and I just can't help but think how badly this will all turn out one day. Paying yield is really only possible in an inflationary currency, and if you lend out bitcoin, how do you expect anyone to ever pay it back with interest considering that the price of bitcoin will forever go up and supply go down? Maybe I'm missing something here, but if the idea is that MSTR has a ton of bitcoin that they will one day be able to lend out and hence this is why its valued at a multiple of bitcoin, then I am hesitant to jump on board with this idea.
 
NoahA said:
I have no opinion of the short MSTR/long bitcoin trade, but I am in the middle of that recent episode with Preston on MSTR that you link above, and I have to say, I'm a bit uncomfortable with how excited him and his guest are about getting yield and explaining that this is one good way to get yield on bitcoin. They seem to glorify the potential of being able to lend out your bitcoin, and hence never having to sell it, and I just can't help but think how badly this will all turn out one day. Paying yield is really only possible in an inflationary currency, and if you lend out bitcoin, how do you expect anyone to ever pay it back with interest considering that the price of bitcoin will forever go up and supply go down? Maybe I'm missing something here, but if the idea is that MSTR has a ton of bitcoin that they will one day be able to lend out and hence this is why its valued at a multiple of bitcoin, then I am hesitant to jump on board with this idea.
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I would be in the trade except I’m getting terrible margin treatment
 
newwurldmn said:
I would be in the trade except I’m getting terrible margin treatment
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John can of course explain this so much better than I could, and I bet he has a good explanation. I think its absolutely true that nobody will be able to accumulate 200k bitcoins going forward, so no single company will be able to match their holdings, but I'm not sure how this creates the premium.
 
newwurldmn said:
I would be in the trade except I’m getting terrible margin treatment
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That was the case for me as well, may be half the reason the trade exists to this degree.

You may find it slightly less capital intensive to short MSTR otm call verticals and hedge with a long BTC spot position. Vol is so high that you might be able to get strikes outside of wherever the broker is stressing MSTR spot to without even going that far back in the term structure, and get better margining.

The call skew is fairly flat so they can be traded without losing too much vol edge loss buying the outer wing.

I switched to this when sell-offs failed to catch any traction and revert the premium. Unless the premium blows out much further, I like that this structure will earn even if the NAV spread floats for a while.

———

@NoahA

Illiquidity cuts both ways; it isn’t inherently valuable, and actually markets usually discount the price of a collectively illiquid position slightly. For example a $10mm single family rental portfolio sold all at once will go for slightly less than the sum of its components, thus implying a higher yield.

Trade some nanocap stocks as an experiment if you want to understand this more clearly. Very easy to build a position showing positive unrealized PnL but much harder to close out the whole position and retain it. You need exit liquidity. Which coincidentally exists for MSTR in the form of retail rhetoric cheering them on and pouring more $$ into the NAV premium as the company itself sells deltas and fades it.

If real value was being added then actual yield on assets, or even BTC/share would have been going up over the past years. There’s usually always some emotionally compelling yet fundamentally unsound ideas accompanying a new hype, and I don’t have much confidence they can be dispelled until the hype is over. Better to come back to this in a year or two and review with more levels heads when we see whether MSTR did or didn’t reach $20,000/share.
 
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The problem I have with the call spread is that the alpha leg is MSTR. It will sell off 50percent before bitcoin rallies 100.

I agree. Amassing 200k bitcoin doesn’t mean anything if your share of that costs 2x .05 bitcoin you have claim to.
Having that much bitcoin doesn’t give MSTR an edge or an advantage in the crypto market.

And here’s the catch-22. If mstr’s 200k bitcoin did allow it to corner the market then bitcoin as a currency has failed.

llIHeroic said:
That was the case for me as well, may be half the reason the trade exists to this degree.

You may find it slightly less capital intensive to short MSTR otm call verticals and hedge with a long BTC spot position. Vol is so high that you might be able to get strikes outside of wherever the broker is stressing MSTR spot to without even going that far back in the term structure, and get better margining.

The call skew is fairly flat so they can be traded without losing too much vol edge loss buying the outer wing.

I switched to this when sell-offs failed to catch any traction and revert the premium. Unless the premium blows out much further, I like that this structure will earn even if the NAV spread floats for a while.

———

@NoahA

Illiquidity cuts both ways; it isn’t inherently valuable, and actually markets usually discount the price of a collectively illiquid position slightly. For example a $10mm single family rental portfolio sold all at once will go for slightly less than the sum of its components, thus implying a higher yield.

Trade some nanocap stocks as an experiment if you want to understand this more clearly. Very easy to build a position showing positive unrealized PnL but much harder to close out the whole position and retain it. You need exit liquidity. Which coincidentally exists for MSTR in the form of retail rhetoric cheering them on and pouring more $$ into the NAV premium as the company itself sells deltas and fades it.

If real value was being added then actual yield on assets, or even BTC/share would have been going up over the past years. There’s usually always some emotionally compelling yet fundamentally unsound ideas accompanying a new hype, and I don’t have much confidence they can be dispelled until the hype is over. Better to come back to this in a year or two and review with more levels heads when we see whether MSTR did or didn’t reach $20,000/share.
More...
 
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