Michael Saylor's Bitcoin Play Wall Street Is Desperate to Own...But Can't. (STRC)

Name: Michael Saylor's Bitcoin Play Wall Street Is Desperate to Own...But Can't. (STRC)
Uploaded: 2026-02-11T20:58:00.000Z
Duration: 1 h 48 min 51 s

Introduction to Bitcoin Treasuries and Options Trading

Guest Introduction

Tyler Row introduces Sole from True North, highlighting his YouTube channel "Night Who Says Me" and the daily show "Orange Pill Investor."

Sole expresses surprise at being among savvy investors, indicating a learning experience in the Bitcoin space.

Current Market Strategies

Sole discusses rotating half of his portfolio into Tesla for better risk management, reflecting on the volatility of holding a single ticker.

He mentions past predictions about Bitcoin prices and acknowledges the challenges faced in 2025.

Understanding Volatility in Options Trading

Importance of Volatility

Discussion on how retail interest surged in Bitcoin strategies during 2020-2021 due to potential yield generation.

Sole explains that high implied volatility is often misunderstood; it’s not just about options being expensive but rather investor willingness to pay for them.

Trading Insights

He emphasizes that options prices drive implied volatility calculations, contrary to common belief.

Sole shares his initial focus on high option prices correlated with high implied volatility when trading options.

The Role of Companies Holding Bitcoin

Strategy's Unique Position

He notes that companies like MicroStrategy (MSTR), which hold significant amounts of Bitcoin, inherit its volatility, keeping their options prices elevated.

Comparison between MSTR and Apple regarding innovation and shareholder returns; he views Apple's dividend as a sign of stagnation.

Premium Generation through Options

Despite fluctuations, MSTR continues to offer higher premiums than many other companies due to its association with Bitcoin's price movements.

The discussion highlights how MSTR provides a safer floor for option sellers compared to more volatile stocks like GameStop.

Reflections on Future Predictions

Long-Term Outlook

Sole reflects on the unpredictability of 2025 but maintains optimism about long-term trends in Bitcoin investment.

A quote from Michael Burry underscores the sentiment that being early does not equate to being wrong in investment decisions.

Understanding Options Trading and Market Sentiment

Personal Investment Strategies and Lessons Learned

The speaker reflects on their initial skepticism towards high-leverage trading strategies, particularly regarding 3x leveraged ETFs, but acknowledges a significant personal investment in long-duration MSTR leaps due to strong sentiment about the stock.

Despite previous success with common shares of MSTR, the speaker admits to over-investing in MSTR leaps, which ultimately led to substantial losses. They express gratitude for Bitcoin's stability as a backup.

The discussion shifts to the speaker's strategy involving selling covered calls while also adding long calls. They emphasize the importance of generating "dry powder" since they no longer have external income sources after quitting their job.

The speaker notes that successful options trading often requires selling options with less than 60 days until expiration, highlighting Tasty Trade's recommendation of around 45 days as an optimal timeframe.

A key insight is that investors must allow sufficient time for their positions to be profitable; buying options with a year-long duration may not always suffice if market conditions change unexpectedly.

Market Dynamics and Volatility

The speaker discusses how market timing can be unpredictable; even when expecting a price increase within 12 months, it could take much longer (18–36 months), complicating call option strategies.

They mention the lack of long-dated call options available (e.g., five years), forcing traders into risky positions or requiring them to roll options until they become profitable.

Confidence in Bitcoin treasury companies is contrasted with traditional stocks like Peloton or Starbucks, which are subject to disruption. Bitcoin balance sheets are viewed as more stable investments.

Misreading Market Signals

The conversation highlights misjudgments regarding correlations between Bitcoin and MSTR prices. External factors such as coordinated short-selling campaigns affected market volatility significantly.

The impact of MSCI indices potentially excluding MSTR is discussed, along with its implications for volatility and option pricing—particularly for shorter-duration options.

The speaker reflects on their learning curve in trading options, emphasizing that markets do not always behave predictably based on past performance; adaptability is crucial for success.

Strategic Changes and Investor Reactions

A comparison is made between company changes (like switching from convertible bonds to preferred shares) and music bands altering their sound—both can alienate existing supporters while attracting new ones.

This analogy illustrates investor sentiment during corporate transitions: some may embrace changes while others resist them if they perceive risks without clear benefits.

Discussion on Market Sentiment and Strategy

The Impact of FOMO and Trading Mentality

Some investors are experiencing a "hangover" after FOMOing into Bitcoin, losing sight of the low time preference mentality that is essential for Bitcoin enthusiasts.

There is a distinction between traditional traders who focus solely on momentum trading versus those who genuinely care about Bitcoin's value.

Proving New Strategies in the Market

Companies must demonstrate the effectiveness of new strategies, akin to proving their product's worth after making bold claims like having an "iPhone moment."

Historical examples show that many companies have failed to deliver on promises, emphasizing the need for market validation.

Stretch's Performance Amidst Market Fluctuations

Despite fluctuations in Bitcoin's price, Stretch has successfully maintained its peg, which is seen as a positive indicator for its stability.

The current interest rate offered by Stretch stands at 11%, raising questions about future adjustments and sustainability.

Analyzing Capital Inflows into Stretch

Sources of Investment in Stretch

Speculation exists regarding whether capital inflows into Stretch are driven by retail demand, hedge funds, or institutional investments from regions like the Middle East.

Initial buyers may have been looking to capitalize quickly but newer investors seem more committed to holding their positions long-term.

Diverse Investment Strategies Among Buyers

Investors are employing various strategies with dividends; some reinvest them into preferred shares or use them to purchase more Bitcoin.

The perception of risk associated with products like Stretch has shifted as it demonstrates stability compared to traditional savings options.

Competitive Advantage Over Traditional Savings

With yields significantly higher than typical savings accounts (e.g., 3%), there’s an increasing incentive for individuals to consider alternatives like Stretch.

As long as Stretch can maintain its peg over time, it will likely attract more attention from both retail and institutional investors.

Market Strategies and Leverage in Bitcoin Investments

Selling Preferreds and Market Leverage

The strategy involves selling more preferred shares to a larger market, leveraging this to obtain better ratings from S&P, which would facilitate further sales.

Initial skepticism about maintaining the price under 101 was expressed; however, the price fluctuations indicated a different outcome than expected.

Analysis of Recent Purchases

A recent purchase raised eyebrows due to its scale: $300 million in stretch versus $1.8 billion in common shares, suggesting a missed opportunity for stronger market signaling with only stretch shares.

The need for balance between common and preferred shares is emphasized to maintain a responsible amplification ratio and avoid excessive leverage.

Responsible Leverage Practices

Companies like Strategy can leverage Bitcoin without encumbrance, allowing them to weather market volatility better than individual investors who risk liquidation on minor price drops.

Individual investors may find it challenging to manage options trading effectively compared to holding investments in companies that leverage responsibly over time.

Long-Term Investment Perspectives

Holding investments in companies that manage Bitcoin responsibly allows investors to avoid the complexities of active trading while still benefiting from potential growth over years.

The discussion highlights the importance of maintaining an appropriate ratio of common ATM (at-the-money) transactions relative to preferred ones for sustainable growth strategies.

Insights on Market Dynamics

There is recognition that both the company and investors are learning how best to navigate these new financial landscapes together, indicating an evolving understanding of market dynamics.

Commentary on significant purchases by notable figures like Sailor reflects broader sentiments within the Bitcoin community regarding current pricing as favorable for investment opportunities.

What is the Right Leverage Ratio for Convertible Options?

Discussion on Leverage Ratios

The current leverage ratio for convertible options is in the low 20s, with potential to reach up to 50, which would be considered advantageous.

Even if Bitcoin trades at a discount and business intelligence software holds no value, trading at ratios of 1.3 to 1.5 could still outperform Bitcoin as long as their assets remain unencumbered.

Market Cycles and Predictions

The speaker expresses skepticism about the validity of the four-year cycle theory in cryptocurrency markets, suggesting that prolonged bear markets could last significantly longer than previously thought.

Historical context is provided by referencing Sailor's experience during an 80% bear market in Bitcoin from the 2021-2022 cycle, highlighting that capital markets remained accessible even under adverse conditions.

Can Bitcoin Experience Major Drawdowns?

Price Predictions and Market Cap

Analyzing potential drawdowns from previous all-time highs suggests that a price drop to around $25,000-$26,000 would only represent a $250 billion market cap for Bitcoin.

The speaker believes such a significant drop seems unlikely given current buying trends among investors who are accumulating Bitcoin at lower prices.

Institutional Trading Dynamics

Concerns are raised regarding irresponsible leverage trading practices among retail investors and how institutional players might attempt similar strategies without understanding Bitcoin's unique properties.

Speculation exists about whether excessive leverage combined with unforeseen market events could lead to substantial price declines below $50, emphasizing volatility risks.

Understanding Risk Management in Options Trading

Short-Term vs Long-Term Perspectives

The speaker differentiates between two types of traders: those who understand uncertainty in short-term price movements versus those unaware of their lack of knowledge.

Technical analysis is mentioned briefly; drawing support lines reveals potential panic points where prices may fall significantly if key levels are breached.

Strategies for Reducing Risk

Selling options can reduce risk exposure; option sellers can lower their cost basis incrementally through strategic trades like covered calls or cash-secured puts.

A philosophy emerges around accumulating small gains over time through consistent trading strategies leading to overall profit without risking large amounts upfront.

The Risks Associated with Derivatives

Control Over Assets

Holding Bitcoin directly offers control over one's assets compared to engaging in derivatives which introduce third-party risks and reliance on external factors like influential figures (e.g., Elon Musk).

While confidence exists in other executives' abilities within companies holding Bitcoin, there remains concern about their ability to maintain investor loyalty compared to charismatic leaders.

Investment Strategies and Risk Management

Long-Term Investment Outlook

The speaker discusses the potential for a strategy to outperform Bitcoin over 5, 10, or even 20 years, especially in light of future market conditions.

Acknowledges the inherent risks associated with stocks compared to Bitcoin, suggesting that it's reasonable to limit exposure by selling portions of stock positions.

Covered Calls as a Strategy

The conversation highlights that selling covered calls is not equivalent to taking a short position; it requires conviction in the underlying asset.

The speaker emphasizes that their approach is more about long-term strategies rather than day trading, focusing on consistent small wins over time.

Performance Metrics and Hurdle Rates

Initially, the S&P 500 served as a hurdle rate for performance comparison; now Bitcoin has taken its place.

The goal is to achieve returns greater than Bitcoin through strategic premium collection from options trading.

Compounding Returns Through Options Trading

By consistently collecting premiums (e.g., 1% weekly), investors can significantly increase their returns through compounding effects.

Illustrates how reinvesting profits can lead to exponential growth in account size and overall returns.

Critical Mass and Account Size Considerations

Reaching "critical mass" in account size allows for meaningful premium collection from options trading.

Discusses the necessity of having an adequate portfolio size (around $100k) to effectively leverage options strategies without excessive risk.

Reverse Stock Splits and Market Sentiment

Anticipation around Strive's upcoming reverse stock split is discussed, which may improve option-selling opportunities despite negative sentiment surrounding such splits.

Highlights challenges faced by smaller accounts during reverse splits, particularly regarding the ability to sell covered calls effectively.

Option Selling and Market Liquidity

The Benefits of Option Selling

The speaker expresses optimism about option selling, particularly for those on a small budget, highlighting the potential to generate meaningful premiums without the fear of significant losses.

Personal Anecdote: A Child's Brokerage Account

A light-hearted story is shared about the speaker's daughter starting a brokerage account, with an impending reverse split for Strive that may confuse her as it will reduce her share count without changing her account balance.

Challenges in Bitcoin Treasury Companies

Discussion shifts to the options market for Bitcoin treasury companies, noting that many lack volume compared to established strategies, making trading more challenging.

Importance of Liquidity in Options Trading

The speaker emphasizes liquidity as a critical factor when trading options. Even if one makes a correct prediction about price movements, low liquidity can hinder selling profitable positions.

An example illustrates this point: buying an option that appreciates significantly can lead to difficulties in selling it back if there are no buyers available.

Real-world Analogies for Understanding Liquidity

A comparison is made between liquid markets and physical assets like gold or silver. If prices rise, local shops may not offer fair buyback prices, underscoring the importance of liquidity in financial markets.

Equitization of Bitcoin and Its Implications

Accessing Hard Money Assets through Equities

The discussion highlights how Bitcoin treasury companies provide exposure to hard money assets while offering better liquidity than traditional commodities like gold.

Distinction Between Equities and Physical Assets

It’s noted that equities represent a form of "paper" Bitcoin but also involve operational elements and management trust which differentiate them from merely holding Bitcoin itself.

Critique of Idealism Among Bitcoiners

Reference is made to a contentious podcast featuring Sailor discussing criticisms from some Bitcoiners towards equity strategies related to Bitcoin treasuries.

Sailor argues against dismissing these strategies outright, emphasizing their potential benefits for corporate balance sheets by investing in Bitcoin rather than fiat currencies.

Balancing Optimism with Caution

While bullish on Bitcoin treasuries overall, the speaker acknowledges concerns regarding execution quality among different companies adopting this strategy.

Bitcoin Investment Strategies and Critiques

The Importance of Self-Custody in Bitcoin

Self-custody of Bitcoin is emphasized as a fundamental step for new investors, highlighting the ongoing risks of scams in the cryptocurrency space.

Responsibility for investment decisions lies with the individual; equity investors must conduct their own research and accept accountability for their purchases.

Critique of Investment Questions

A pointed critique arises regarding an interview question directed at Sailor, suggesting it was ignorant and lacked depth.

The discussion revolves around whether investing in Bitcoin is justified, questioning the validity of criticism against those who focus solely on Bitcoin investments.

Market Dynamics and Company Valuation

There’s an acknowledgment that companies without Bitcoin may trend towards zero value over time, contrasting them with those holding Bitcoin which could become significantly valuable.

The speaker expresses skepticism about fiat currency's longevity, identifying as a proponent of hyperbitcoinization while critiquing institutions' reluctance to acknowledge fiat's potential decline.

Corporate Strategy and Cash Flow Concerns

The conversation touches on how labeling companies without positive cash flow as "bad" can be misleading, especially within an inflationary fiat system.

Historical context is provided regarding a company’s struggle against larger competitors like Microsoft, illustrating challenges faced by businesses operating under current economic conditions.

Interview Dynamics and Future Implications

The interviewer’s approach is scrutinized; there’s a suggestion that they should have been more prepared to engage meaningfully with Sailor's perspective.

There's speculation about how future interviews might improve if questions are better thought out, reflecting on the need for deeper engagement in discussions surrounding Bitcoin investment strategies.

Understanding Sailor's Perspective

Sailor's extensive knowledge of Bitcoin issues is acknowledged; he adopts a corporate strategy aimed at maximizing capital through Bitcoin accumulation.

The speaker notes evolving views on adding Bitcoin to balance sheets, recognizing its strategic importance for businesses amidst ongoing debates within the community.

Bitcoin Strategy Insights

Understanding Bitcoin Strategies Among Executives

The speaker emphasizes the importance of engaging with executives to understand their diverse Bitcoin strategies, highlighting the variety within the ecosystem.

Discussion on Stretch's current dividend rate of approximately 11% and its stability around a $100 peg, which allows Sailor to utilize an ATM strategy effectively.

Dividend Dynamics and Market Reactions

A question arises about whether Sailor can easily reduce the dividend as interest rates fall, especially after previous volatility when Stretch lost its peg.

The speaker notes that strict guidelines exist for adjusting dividends based on market performance, specifically if prices exceed $101.

Market Demand and Interest Rates

Initial skepticism about maintaining the price under $101 is expressed; however, there’s recognition of potential demand due to higher yields compared to traditional markets.

The conversation highlights concerns over who would buy at inflated prices (e.g., 150 cents), yet acknowledges that high yield (11%) attracts investors seeking better returns than typical money markets.

Future Projections and Volatility Management

Predictions suggest that if they cannot maintain the price under $101, a reduction in interest rates will be necessary. This could lead to significant market reactions during upcoming earnings calls.

The speaker anticipates reduced volatility moving forward as new buyers are more committed rather than speculative traders looking for quick profits.

Dividend Implications on Stock Prices

An analogy is made comparing "hot racking" in Navy terms to investors trying to maximize dividends from both Seda and Stretch products.

Clarification is provided regarding how dividends affect stock prices differently for preferred shares versus common stocks, suggesting minimal impact on maintaining pegs post-dividend payouts.

Personal Anecdotes and Broader Market Context

The speaker shares personal experiences encouraging non-Bitcoiners with cash reserves to invest in Stretch for better yields amidst shrinking money market returns.

Mention of a financial advisor friend managing a large portfolio indicates broader trends in investment behavior towards Bitcoin-related assets amid high liquidity in money markets.

Insights on Client Investment Strategies and Bitcoin Trends

The Process of Offering New Products

A broker explains that introducing a new product to clients involves identifying their interest, submitting a request, and typically receiving quick approval unless there are concerns.

Hesitation in Product Adoption

Despite having significant client funds available for investment in products like Stretch, the broker is hesitant to pursue these opportunities due to his comfortable salary and fear of being labeled as a "crypto guy."

Fear of Non-Traditional Thinking

There exists a reluctance among brokers to adopt non-traditional investment strategies, particularly when they are already successful. This fear stems from potential repercussions or being flagged by their brokerage.

Future Outlook on Bitcoin Investments

The speaker expresses optimism about Bitcoin's future, noting that while the launch of ETFs by major firms like BlackRock may eventually change the landscape, substantial education within the Bitcoin ecosystem is still necessary.

Engagement with Online Platforms

The speaker shares their presence across various platforms including X (formerly Twitter), YouTube, and Nostra. They highlight Nostra's algorithm-free environment as less addictive compared to other social media platforms.