- Despite MicroStrategy (MSTR) stock falling 44.59% from November 2024 to March 2025, put options only yielded a maximum return of 27%.
- High volatility in MSTR stock at its peak resulted in expensive option premiums, limiting potential returns even as the stock declined.
- Comparable Tesla put options during a similar period yielded returns of 300-2,059%, highlighting how volatility impacts option strategies differently across securities.
MicroStrategy’s stock has declined by 44.59% since reaching its peak closing price of $473.83 on November 20, 2024. By March 12, 2025, the stock price had fallen to $262.55, raising questions about the profitability of shorting the stock during this downtrend.
To evaluate this strategy, financial analyst Korok Ray examined put options rather than direct shorting, noting their advantages including limited downside risk and easier tracking through daily price reporting. The analysis focused on determining whether investors could have profitably capitalized on the stock’s decline.
Surprisingly, a long-term put option with a $500 strike price purchased at the November peak and expiring in December 2025 yielded only a 4% return. Ray calculated this based on the option’s ask price of $249.80 on November 20 and bid price of $259.90 on March 12.
Looking at shorter-term options with March 21, 2025 expiration dates, Ray discovered the maximum potential return came from a put option with a $520 strike price, yielding a 27% return – considerably lower than the stock’s 44.59% drop during the same period.
Comparing MSTR to Tesla Options
For context, Ray compared these results with Tesla options during a similar timeframe. When Tesla declined 23.29% from January 15 to February 11, 2025, a put option with a $370 strike price returned 300%. More dramatically, when Tesla fell from $428.22 to $222.15 between January and March 2025, a perfectly timed put option with a $260 strike price could have delivered a 2,059% return.
The analysis highlights that even with perfect timing, shorting MicroStrategy through put options couldn’t approach the returns possible with Tesla puts during comparable percentage drops.
The Volatility Factor
The key explanation lies in volatility. When MSTR hit its peak in November 2024, its volatility was exceptionally high, which significantly increased option premiums. This elevated "insurance cost" reduced potential returns, even as the underlying stock declined substantially.
While Tesla also reached record highs during this period, its ascent was more gradual, resulting in lower relative volatility and cheaper option prices. This fundamental difference explains why similar percentage drops in stock prices can produce dramatically different option returns.
The findings demonstrate that for highly volatile assets like Bitcoin and MicroStrategy, simply betting against price increases through options may not yield returns proportional to price declines due to the volatility premium built into option pricing.
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