Friday Afternoon Crash?

by JDH on June 8, 2024

For the last two Fridays, about an hour before the close, Bitcoin has had a mini-correction. On Friday, it was down almost 5% from top to bottom.

As a result, from lunchtime until the close, MSTR—Miscrostrategy Inc. was down almost 7%.

What gives?

I have no idea, other than the Big Boyz like to play with the tape leading into the close, to blow out option positions.

It happened to me, but in a good way.

I hold MSTR, and as you know, I’ve been selling covered calls against it.  I had strike prices of $1,600 and $1,650 leading into Friday.  On Friday afternoon, MSTR was trading below $1,650, so I covered my positions, booked a profit, and that was it.

However, had I waited until the close, the options would have expired worthless, and I would have generated a greater profit.

So be it.  I didn’t want the stock to whipsaw back up at the close resulting in my shares being called.  That would be a disaster, because I’m sitting on a huge gain, and I don’t want to prematurely generate a taxable capital gain.

Will I cover this week?

Probably, but I’ll wait until we have an up day or two.  No point in covering at the bottom.

That’s the update.  See you next week.

 

Sort of won, kind of…

by JDH on June 1, 2024

I don’t want this to turn into the MSTR—Miscrostrategy Inc. blog, but since nothing else is going on in the world, here’s the update:

MSTR had a big drop this week.  It peaked at $1,715 on Thursday, and dropped to $1,445 on Friday before bouncing slightly to close at $1,524.

I am bullish on the stock, so I’m holding, but I want to juice my returns, so I’ve been selling out of the money covered calls with one week to expiry.  The premiums are large, so it should be easy money, but in a bull market, it isn’t.  I’m way up on the stock, but down on the covered call trade.

On Thursday, after the drop, I was able to close out this week’s calls at a nice profit and roll them forward, so I won.  A smarter move probably would have been to close them out and stop, but that’s not my style.  So, we’ll see what happens next week.

Bitcoin is having trouble making a new high.  It could happen tomorrow, or it may take a while.  My assumption is that money printing will continue, and that’s good for risk assets, but who knows.

For now, the summer weather is here, so I won’t spend any more time thinking about it.

See you next week.

 

 

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As frequent readers know, I also have a small position in a Bitcoin ETF and a position in MSTR—Miscrostrategy Inc. It’s a leveraged play on Bitcoin, and I’m up considerably on my position. All good. Since May 1, Microstrategy has increased from just over $1,000 to close at $1,684.84 on May 24, 2024.  A 67% gain […]

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