Should I buy $MSTR or Bitcoin?

Should I buy Microstrategy or Bitcoin?

Microstrategy ($MSTR) announced an additional ₿ buy just now, and they now hodl 423,650 coins.

Today each share represents 0.00176781 ₿ or 176,781 sats.

You can spend $175 at Strike and buy and own those sats forever.

Or you can spend $386 on MSTR and those sats will be worth more sats later.

This seems like an expensive choice at first glance. You're paying 120% more to buy the stock.

However, as MSTR buys the ₿, they eat up available ₿ supply, which increases scarcity, which drives ₿ price higher. This is a virtuous circle because having more ₿/share drives

$MSTR price up, and then MSTR sells more stock at the market price, and then they buy more ₿, and it continues.

The net effect is the 💲💵-measured value of BOTH the spot ₿ and the stock go up.

Which goes up more? Well, insert that caveat about past performance not being a guarantee of future gains right here, but MSTR has been going up faster.

So, how do you play such a game to your advantage? Well, as Michael Saylor

 just told Dave Portnoy a few minutes ago, YOU HAVE TO GET IN THE GAME. Everyone who plays ₿ long enough wins.

But maybe you can win more with Microstrategy stock. However, IMHO, you're only going to win if you convert those fiat dollar gains that you pocket on the MSTR trade into btc.

In 2023 I was stacking ₿ by trading between $GBTC, $OBTC, and $MSTR, whenever I could trade one into another to increase my representative/proxy stack of sats for the same amount of fiat. I considered this a bitcoin arbitrage play. I posted about this, but never saw anyone else reporting this.

Here's an example:

I'm pleased with all those trades because each one netted me more sats, however I would have a fatter dollar stack if I had simply held onto the MSTR stock.

So now, what to do going forward? Well, I can still hold onto the stack of MSTR that I had, but I can earn yield by selling covered calls. Keep in mind that selling calls against the shares you own will require option-writing privileges in your brokerage account, and it will cap your upside potential on the MSTR stock.

One of the things to consider is what happens if bitcoin rips even higher in a rapidly volatile fashion and then you are sad because you convert those dollar stacks into less btc than you thought you would. I think you can mitigate some of this sadness by immediately buying btc with the premium you collected when you covered the shares.

If btc/mstr plunges in a rapid fashion, you've already pocketed the premium you sold on the call. You can buy these calls back, at a lower price, and then re-cover whenever the price rises.

Also, be aware of the tax implications of all of these trades. I prefer to do my short-term trading in a 401K, so there are not short-term cap gains tax on these trades.

Bitcoin is Volatile. MSTR is MOAR VOLATILE! But for those of us that know ₿ is going up forever, you can stack sats faster with some option plays. Speaking of the volatility, MSTR traded down about 4% to $373 while I was writing this.

I am going to post my option moves as I make them...

Here was the first one that I made on Nov 26:

That call expired worthless. I pocketed $19.44 for each sold call, which lowered my basis to $347.55 for the position. When I sell another call this week, it will lower my basis further.

I will probably initiate some sold puts along the way for $ collection if this stack of MSTR ever gets called away. I suggest that you start learning about options before you put real $💰 behind them. Maybe paper trade for a bit if you have never done it before.

Options Profit Calculator is a good resource to see what your potential loss/profit could be.

Let's go $MSTR community! 🫡