Okay, folks, let’s talk MicroStrategy (MSTR). 10x Research is dropping some serious truth bombs, and I’m all for it. They’re bullish on put options for MSTR, and frankly, it makes a ton of sense. We’ve seen Bitcoin absolutely skyrocket, hitting new all-time highs, yet MicroStrategy’s stock price is lagging way behind its previous peak. What the hell is going on?
Photo source:www.tradingview.com
10x founder Markus Thielen is pointing to a disconnect – a clear divergence between Bitcoin’s strength and MSTR’s weakening momentum and volatility. Basically, investors are starting to lose their damn minds about MSTR, even with Bitcoin’s insane performance.
They’re recommending a put option spread: buying puts with a strike price of $370 and selling puts at $300, both expiring June 27th. It’s a smart move, capitalizing on what looks like a cooling-off period for this once-red-hot stock.
Let’s break down why this matters.
Understanding Put Options: A put option gives you the right, but not the obligation, to sell a stock at a specific price (the strike price) on or before a certain date (the expiration date). If the stock price falls below the strike price, you profit.
MicroStrategy and Bitcoin Correlation: MSTR’s price has historically been closely tied to Bitcoin’s price. However, that correlation isn’t always perfect, and right now, it’s clearly broken down.
Why the Divergence? Several factors could be at play here, including profit-taking by MSTR investors, concerns about the company’s debt load, or simply a shift in risk sentiment.
Volatility is Key: Thielen emphasizes the decrease in MSTR’s volatility. Lower volatility generally means smaller price swings, making it less attractive to speculative traders. This chill winds could signal further downside. Don’t sleep on this!
