Tesla Inc and MicroStrategy Inc stocks are up based on Bitcoin gaining value over its impending approval for a US ETF (Exchange-traded fund). Both the corporate has exposures in Bitcoin, as seen on its balance sheet according to Bloomberg news.
However, the surprising thing is the divergence in the Options derivatives, which see a divergence between the two corporates. The cost of a Put option versus a call option is inverted. The bullish overtones in Tesla vs. bearish options for MicroStrategy present an opportunity as per RBC Capital Markets derivative expert Amy Wu Silverman.
Silverman is not shocked that the Tesla derivative isn’t inverted. However, there is an opportunity to sell a put option which is expensive compared to tesla call options. She has recommended a hedge trade which means selling Tesla Put options at $ 700 for December series expiry while buying $ 930 call options.
Bitcoin has been volatile in 2021 so far, but its value nearly doubled when it started the year. The value now is close to its all-time high of $65000 in April this year. Many companies’ digital asset stocks move in the same direction as the largest cryptocurrency, Bitcoin. This impact fits the company MicroStrategy well, which has high exposures in cryptocurrency. The CEO Michael Saylor is a known bully in Crypto trading and has been taking corporate exposures on Bitcoin. Tesla also has Bitcoins on its balance sheet, but it is far less linked to deciding its corporate fate.
The earnings of Tesla are expecting to be announced soon, and Silverman expects this factor to have a say in its options bets. Tesla share prices are now linked to Bitcoin’s price after investing $ 1.50 billion in the cryptocurrency.