Options traders are building bearish positions around Strategy’s (formerly MicroStrategy’s) favorite STRC stock after its value fell to a record low, adding a new layer of pressure to one of Michael Saylor’s main funding tools for buying Bitcoin.
Strategy’s Variable Rate Series A Perpetual Stretch Preferred Stock, known by the ticker STRC, closed at $89 on Wednesday after hitting an intraday low of $88.51.
The close left the price about 11% below the indicated $100 level and extended the year-to-date decline to about 10.7%.
This move draws extra attention because STRC is designed to trade near $100 via monthly dividend adjustments.
Instead, the preferred stock is now trading near levels that imply investors want a higher payout for holding it, while options activity shows traders leaning further downside.
STRC options traders take bearish positions
OptionsGraphs facts for STRC contracts expiring on June 18, total open interest showed 8,951 contracts, compared to 7,906 call contracts.
That put-call open interest ratio of 1.13 is modestly bearish, but the concentration of activity is more telling. Open interest in puts was 1,912 contracts at the $60 strike, 1,230 at the $80 strike, and 916 at the $85 strike.
The same data showed a maximum pain level of $95, above STRC’s closing price, while net gamma exposure was $1.1 million per 1% move. Negative gamma can lead dealers to hedge in ways that amplify price swings when an asset falls, although the effect depends on trade flows and market depth.
This options setup indicates that traders are keeping an eye on whether the discount to par becomes persistent enough to force a change in Strategy’s dividend policy or delay the use of STRC as a BTC funding vehicle.
Andre Dragosch, head of research at Bitwise Europe, said STRC’s weakness suggests Saylor may need to raise the dividend or the broader interest rate environment may need to ease before the preferred stock can return to $100.
He estimated that a dividend closer to about $13 per year, or roughly 13% of the stated amount, would be needed to revive the stock under current conditions.
That makes for a difficult decision. Raising the dividend could support STRC’s current price action and reopen the issuance channel, but it would also increase Strategy’s cash obligations.
On the other hand, leaving the dividend unchanged may maintain short-term cash costs, but risks increasing the discount further.
Strategy’s dividend runway is under scrutiny
The strategy has tried to relax concerns STRC by pointing to the size of its Bitcoin holdings, saying its reserves provide for that 32 years of dividend coverage. The company owns 846,842 BTC, which at recent prices is worth approximately $54.2 billion, making it the largest public holder of the cryptocurrency.
On paper, the coverage claim remains intact. Strategy’s Bitcoin treasury is worth just under $55 billion, compared to about $1.7 billion in annual preferred dividend obligations. However, that calculation is highly dependent on the market price of Bitcoin and does not answer the cash flow question that investors now face.
CryptoQuant analyst JA Maartunn said:
“If Strategy had to sell BTC to cover those dividends, it would create selling pressure that could drive down BTC prices. That would in turn reduce the value of its BTC reserves and shorten the very dividend cover it emphasizes. In other words, if it continues, it risks becoming a downward spiral.”
The sensitivity of that claim has indeed already become clear. Last November, Strategy claimed it had 71 years of dividend coverage, assuming Bitcoin’s price remained flat. But since then, the price of Bitcoin has halved and the estimated coverage period has fallen sharply since then.
That does not mean that Strategy has almost exhausted its assets. The company still has a large Bitcoin position and has raised cash by selling common stock.
However, the market’s concerns have shifted from asset value to liquidity. Preferred dividends must be paid in cash when declared, while Strategy’s Bitcoin holdings fluctuate with the market and are not pledged as direct collateral to STRC investors.
Quinn Thompson, Lekker Capital’s chief investment officer, said pressure on Strategy’s capital structure is likely to continue until the company strengthens its balance sheet and improves liquidity.
He said the weakness has spread beyond STRC, suggesting investors are reassessing the company’s broader financing model rather than a single preferred bond.
Singapore-based crypto trading firm QCP said Bitcoin’s recent underperformance partly reflects these concerns. Bitcoin has remained below $65,000 even as broader risk assets have traded higher, with traders looking at whether Strategy may need to sell more Bitcoin or issue additional MSTR shares to meet its preferred stock obligations.
QCP said Strategy’s repurchase of $1.5 billion of 2029 convertible senior notes, followed by new sales of common shares, increased the overhang.
The company has raised about $200 million through MSTR sales and has continued to buy Bitcoin with the proceeds, but investors remain focused on how long the cash runway can support dividend payments without putting pressure on the capital structure.