Discharge of responsibility: The analyst who wrote this article has actions in strategy.
Strategy (Mstr) aggressive bitcoin
The acquisition strategy has drastically increased the value of its convertible debt.
With Bitcoin stable near its record price and the company’s shares recover around $ 450, five of the six bonds in circulation are deep in money, which means that the price of the shares exceeds its conversion prices. Only the 2029 note, with a high conversion price of $ 672.40, remains out of reach.
The TYSONS headquarters, based in Virginia, issued convertible notes for a total of $ 8.2 billion in notional capital with low low coupons of only 0.421%. The bonds, which mature between 2028 and 2032, have an established price based on MSTR and BTC levels at the time of problems in which debt can become common actions.
Mstr’s shares have recovered from only $ 235 three months ago and is in view of the $ 543 record at the end of last year. The rally has taken the market value of the bonds to $ 13.4 billion, approximately $ 5.2 billion above its notional value. The premium reflects how much investors are willing to pay in the secondary markets, driven by the potential of the bonds to become valuable equity.
Lately, however, the strategy has stopped the issuance of new convertible notes. That may be due to the most cautious feeling as reflected in the options market.
As of July 15, Mstr’s implicit volatility is located at 53.1%, well below the maximum of 200%. Implicit volatility is an indication of how much they believe that option operators will move in the future based on their market positioning.
The open interest remains healthy with more than 2.4 million contracts, but both the communication relationship of open interest (0.93) and the volume of heating (0.62) Indicate a neutral feeling, which suggests that merchants are not aggressively betting on an important increase in actions. A PUT is a cautious position that offers protection against the decrease in price in the underlying asset, while a call is a bullish instrument that allows merchants to obtain profits when the price increases.
In addition, the negotiation volume is only 20% of its 30 days, insinuating a reduced speculative interest.
This activity of outdated options implies that while the MSTR price is high enough to put five of the six bonds turned into money, there may not be the same enthusiasm on the sparkling market that allowed the company to emit convertible into ultra low coupons and favorable terms.
Investors may require higher performance or lower conversion prices for any new issuance, which could dilute existing shareholders before.
