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3 Options Strategies for Those Hell Bent on Buying MicroStrategy Stock
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Short seller Andrew Left of Citron Research revealed on Nov. 21 that his firm had taken a short position in MicroStrategy (NASDAQ:MSTR), the software company that has become a prominent Bitcoin owner.
As Left pointed out in a post on X, buying MSTR stock made sense several years ago as a way to invest in cryptocurrency without putting all your eggs in one basket. But now MicroStrategy’s valuation has come unglued from Bitcoin.
“Now that Bitcoin investing is ‘easier than ever,’ MicroStrategy’s volume ‘has completely detached from BTC fundamentals,’ Citron wrote in an X post, adding that ‘while Citron remains bullish on Bitcoin, we’ve hedged with a short $MSTR position,” BNN Bloomberg reported.
While Left makes the point that you might as well own Bitcoin directly if you’re into the cryptocurrency, if you’re hell-bent on owning MicroStrategy stock, here are three options strategies to avoid losing your shirt.
Key Points About This Article:
- MicroStrategy (NASDAQ:MSTR) should be able to appreciate by 60% over the next two years.
- A married put protects your downside.
- Selling a put generates income and perhaps a better price to buy more.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
The Case for Owning MicroStrategy Stock
The short seller doesn’t believe there is one.
If you’re desperate, however, I’m sure something is appealing about CEO and founder Michael Saylor’s software business that will make you want to buy MSTR over Bitcoin.
Over the past month, MSTR stock is up nearly 49% despite an 18% correction in the past week. By comparison, Bitcoin has gained more than 40%, as I write this, almost 900 basis points less than MSTR. The differential gets even larger over the six-month (3.6x higher) and one-year (4.4x) periods.
It’s attractive to investors because it acts as a leveraged Bitcoin ETF without having to pay management fees or interest on the Bitcoin if held directly through a margin account.
According to S&P Global Market Intelligence, MicroStrategy has a market cap of $87.24 billion and a net debt of $4.22 billion, good for an enterprise value of $91.46 billion. That’s nearly 200x its trailing 12-month revenue of $467.2 million. By comparison, Nvidia’s (NASDAQ:NVDA) enterprise value of $3.30 trillion is 29.2x revenue.
If you’re a stock market investor, there’s no question which stock you should buy for the long haul, but you’re hell-bent on owning MSTR stock, so here are three options to help you do just that.
Options Strategy # 1
This first strategy assumes that MSTR will keep moving higher well into 2025. There are many unusually active call options with strike prices well out of the money. Because you want to own MicroStrategy, buying something near or just out of the money is better.
Of the unusually active options trading on Nov. 26, the Dec. 18/2026 $360 strike fits the bill. It has a volume of 21, 21x the open interest. The ask price of $230.40 is 39% of the $590.40 breakeven. The ITM (in the money) probability is 51.72%.
With 752 days to expiration, you’ve got plenty of time for it to appreciate 60% or more. Costing $23,040, it won’t come cheap. However, you can generate a 50% return by selling the call at any point before expiry if it appreciates by $142.50 (37%).
That’s more than doable.
Options Strategy # 2
This strategy involves a “married put,” which is when you buy 100 shares of MicroStrategy at current prices and simultaneously buy one long put to protect on the downside.
So, for example, let’s say you pay $369.23 for the shares and then $65.80 for the Dec. 20 $370 put. The put is just in the money, so your net debit cost is $435.03, the share price paid plus the premium on the put. Your maximum loss is $65.03, the net debit less the $370 strike.
The only problem with this strategy is that the protection you’ve placed is for less than a month. Finding a put expiring in 6-12 months is generally recommended. Sometimes, if you believe the short-term volatility will dissipate, a shorter DTE of 30-60 days can still deliver the required protection.
So, looking out nearly a year, the MicroStrategy Sept. 19/2025 $340 put is slightly out of the money, with a net debit of $498.87 and a maximum loss of $158.87, which is the net debit less the $340 strike.
If it heads to $750 in a year, for example, your gain would be 116% based on the $347.25 share price paid for the 100 shares. Your profit would be $260.70 a share based on $402.75 appreciation less the $141.80 ask price or premium paid on the married put.
Option Strategy # 3
The third strategy is straightforward.
You buy 100 shares of MicroStrategy at the current price of $352.67. You then sell a put option well out of the money for income or the potential to buy 100 more at a lower price, say 20% less. That’s a strike price of around $275.
One expires on Dec. 27. The $275 strike would generate $29.85 in income by selling the put for an 8.5% return over 31 days. On an annualized basis, that’s 100%.
In the worst case, you’re in the red if the share price falls to $245.15. If you’re confident about MicroStrategy, it shouldn’t be an issue.
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