【The extreme volatility of MicroStrategy is 2.5 times that of Bitcoin, is it dangerous for investors?】
MicroStrategy (MSTR) stock's volatility is currently 2.5 times that of Bitcoin, providing potential high-yield opportunities for options traders. This year, MicroStrategy's stock has soared 500% due to investor preference for its Bitcoin holdings, compared to a 124% increase in Bitcoin.
Data shows that MSTR's 30-day implied volatility (IV) is 140.86%, significantly higher than Bitcoin's 55.65%. The increase in implied volatility drives up options premiums, increasing the income from writing (selling) call or put options. Investors use a "covered call strategy" to write options at strike prices above the current price, earning additional premium income.
This strategy combines with spot holdings so that even if the market rises, spot gains can offset potential losses from options contracts. However, high volatility also brings risks, as the limitations imposed by options may cause investors to miss out on higher returns.
Traders generally believe that MicroStrategy's high volatility makes the expected return on options trading potentially 2.5 times that of Bitcoin, but caution is advised in dealing with potential risks.
