Debunking the myth of MSTR being a good leverage bet on Bitcoin: $MicroStrategy(MSTR)$
They don't hold any derivatives of BTC, all their purchases were on the spot market
The debt they have taken on was never used in a leveraged manner, i.e. like a mortgage - they are always required to have 100% in funds in order to purchase the token. Find me a lender of BTC who will accept a 20% down payment on BTC purchase and I'll wire you half of my next pay check to invest with it.
So, the belief that any move upward in BTC resulting in 3x move up in stock price, and the premium over its value are justified is a fallacy.
However, there's an actual way of getting leveraged exposure to BTC:
Go to CME website and search for micro bitcoin futures (or if you have enough funds, the real thing - no need for the micro).
Find a broker that offers trading in this contract (mine does)
These contracts are valued at 1/10th of the actual token's move, so here's how the math works out:
buy 1 contract for 67K
in my case, maintenance margin would be around $2.4K
the token goes up by $1K, increasing your position's value by $100
the underlying just went up by 1.5% = 1 / 67
the value of your investment did so by 4.1% = 100 / 2400
Hence, you have just achieved a leveraged gain by a factor of about 2.75 - this factor is guaranteed by the margin and the way the price increment is built into the contract. No need to buy shares in a heavily indebted overhyped scam company poised to dilute its shareholders with every convertible debt offering.
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