Practical Investment Commentary - No Hype

Last week, I said the MSTR Covered Call Strategy didn’t Work This Week.  Well, it didn’t work again this week, either.

I am trying to “juice” my returns on the shares I own in MSTR—Microstrategy Inc. (now Strategy Inc., but the ticker symbol has yet to change).  I sell out-of-the-money covered calls that expire in one to two weeks, hoping that as the time premium erodes, I pocket the premium.  It’s a great strategy (no pun intended) with Strategy is trading sideways or down.  It’s a bad strategy when Strategy is going up, as its done over the last month.  Here’s the six month chart:

As you can see, it traded between $291 and $404 from the start of the year until last week, so selling calls was a great strategy. But in the previous four weeks, MSTR has gone from $240 to $412, which has been a disaster for my strategy.  Here’s the summary of my options trades on 200 shares (so two contracts) since the beginning of January:

It worked great for the first two months, but in the last four trades, I’ve had to repurchase the options at a loss to prevent having my shares called away.  Assuming the options I sold last week expire worthless (which doesn’t seem likely), I’ll be down almost $2,000 on the strategy.  I should have held the shares and done nothing.

The good news is that the underlying shares are up $16,000, so overall I’m good, but again, simply holding was a better strategy.

Bitcoin is now comfortably above $100,000, and will likely keep going until resistance at $108,000, and then we’ll see what happens.

I plan to attempt to extricate myself from this trade.  We’ll see if I can pull it off.

Thanks for reading.  See you next week.