Trade Alert - (MSTR) May 16, 2025

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.

Trade Alert – (MSTR) – BUY

Buy the MicroStrategy (MSTR) June 2025 $470-$480 in-the-money vertical bear put debit spread at $8.40 or best

Opening Trade

5-16-2025

expiration date: June 20, 2025

Portfolio weighting: 10% weighting

Number of Contracts = 13 contracts

MicroStrategy has become my new money spread, which now trades under the name of Strategy. With a still sky-high 67% implied volatility for the options, the highest in the market, and waning upside momentum, I am more than happy to double up my position on the short side.

(MSTR) benefits from an endless stream of suckers who believe that bitcoin will keep rising to $250,000, $500,000, or $1 million. As a result, (MSTR) now owns 2.3% of all outstanding bitcoin, or some 568,846 coins worth $58.98 billion. The market capitalization of (MSTR) is $107.69 billion. That means that (MSTR) trades at an incredible 86% premium to its underlying bitcoin holdings!

But while future Bitcoin issuance is limited to a total of only 21 million coins by the year 2140, issuance of Bitcoin derivatives issued by Wall Street isn’t. The combination of bitcoin and its derivatives is in effect a Ponzi Scheme which depends on ever-rising amounts of buyers to keep the price rising….until there are no more.

That makes (MSTR) a great short play. When it falls, it falls very fast, and the (MSTR) premium shrinks dramatically. Look no further than the meltdown that occurred from the post-election high, where (MSTR) fell by a staggering 55%. This wasn’t supposed to happen.

Crypto has so far failed miserably as a safety and diversification play, with gold up 35% and Bitcoin down 30% at the lows. But the “Sell America” trade is gaining steam with a collapsing stock, bond, and US dollar markets, and money is now definitely moving into the crypto sector. It turned out that the real “Trump Trade” was a “Sell America” trade.

Therefore, I am buying the MicroStrategy (MSTR) June 2025 $470-$480 in-the-money vertical bear put debit spread at $8.40 or best

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

Do not pay more than $9.30 or you will be chasing. If you can’t get this done, raise your strike prices by $10.

It’s hard to know where the real pricing of this spread is, as it is so far in the money. The current market is showing $7.25 bid – $9.30 offered.

Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 10 cents with a second order.

If you don’t want to sit in front of a screen all day or live in a foreign time zone when the US stock market is closed, such as Australia, or don’t want to sit in front of a screen all day, simply enter a spread of Good-Until-Cancelled orders overnight, like $8.40, $8.50, $8.60, $8.70, and $8.80. You should get done on some or all of these.

This is a bet that MicroStrategy will not rise above $470 by the June 20 option expiration in 24 trading days.

By the way, my Italian grandmother met Carlo Ponzi, who didn’t believe a word he was saying. He offered a 50% return on investment every 45 days. He promoted International Postal Reply Coupons, which benefited from foreign currency differentials between Europe and the US after WWI. Although the early investors were paid off, most lost everything. They lost about $20 million in 1920 dollars (approximately $314 million in 2025 dollars).

Here are the specific trades you need to execute this position:

Buy 13 June 2025 (MSTR) $480 puts at………………….…$89.00

Sell short 13 June 2025 (MSTR) $470 puts at……………..$80.60

Net cost:………………………….………………………………………$8.40

Profit: $10.00 – $8.40 = $1.60

(13 X 100 X $1.60) = $2,080 or 19.04% in 24 trading days

Carlo Ponzi in 1920

If you are uncertain about how to execute an options spread, please watch my training video by clicking here.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.

Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.

Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.

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