Strategy’s Convertible Bond Prices Surge as Stock Advances Back Toward Record High
2025-07-16 09:43:55
Main Idea
Strategy's convertible bond prices have surged as the company's stock advances, creating billions in unrealized value, with most bonds now trading deep in the money.
Key Points
1. Five of the six convertible notes are trading deep in the money, with only the 2029 note remaining out of reach due to its high conversion price of $672.40.
2. Strategy issued convertible notes totaling $8.2 billion in notional principal with an average coupon of just 0.421%, maturing between 2028 and 2032.
3. The bonds' market value has risen to $13.4 billion, approximately $5.2 billion above the valuable equity, as MSTR's stock rebounded from $235 to near its record high of $543.
4. MSTR's implied volatility is currently at 53.1%, significantly lower than past highs above 200%, indicating reduced market uncertainty.
5. Trading volume is just 20% of its 30-day average, suggesting muted options activity despite the high stock price.
Description
Disclaimer: The analyst who wrote this article owns shares in Strategy. Strategy’s (MSTR) aggressive bitcoin BTC acquisition strategy has dramatically boosted the value of its convertible debt. With bitcoin steady near its record price and the company's shares rebounding toward $450, five of the six bonds outstanding are deep in the money, meaning the stock price exceeds their conversion prices. Only the 2029 note, with a high $672.40 conversion price, remains out of reach. The Tysons Corner, Vi...
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