Long-dated, far OTM puts on MSTR as a cheap hedge against a market crash

Not trying to start a crypto debate, but it’s clear that crypto crashes hard whenever markets experience fear or downturns. If a major crash or recession happens, I strongly believe MicroStrategy (MSTR) would collapse—potentially to zero or at least a 90%+ drop.

With the incredible bull run in 2023, I’m worried about what comes next. There are plenty of risks—tariffs, high PE ratios, AI speculation, and the Buffett Indicator flashing warning signs. Timing the market is impossible, but I’d rather sacrifice a little return for some peace of mind.

Looking at Dec 2025 puts on MSTR with a $100 strike price, they currently cost $6 per contract. If a major crash happens, these could pay off massively. If I’m wrong and the bull market keeps going, worst case, I’m just out the premium. Thoughts?

Why MSTR puts instead of something like SPY puts that are more aligned with the overall market?

Amari said:
Why MSTR puts instead of something like SPY puts that are more aligned with the overall market?

More speculative companies like MSTR get hit way harder in a crash than blue chips in SPY. Walmart isn’t dropping 90%, but MSTR could. Plus, MSTR could collapse even without a full market crash.

@Zed
You’re right, but MSTR has higher implied volatility, meaning you’re paying a bigger premium for the options. You’re paying for that volatility.

Wendell said:
@Zed
You’re right, but MSTR has higher implied volatility, meaning you’re paying a bigger premium for the options. You’re paying for that volatility.

Yeah, some of it is already priced in. But the market hasn’t priced in a total collapse.

$600 for a potential $10,000+ payout seems reasonable. This is the same guy who started the dot-com crash, but Wall Street seems to have a short memory.

Amari said:
Why MSTR puts instead of something like SPY puts that are more aligned with the overall market?

Because MSTR is a house of cards that will collapse the moment the market takes a serious downturn.

Are you thinking of this as a pure play, or part of a broader hedging strategy? If you’re just trying to time a recession, there might be better ways to hedge. Betting against a secondary play on Bitcoin is risky.

@Larkin
I think a downturn is overdue. PE ratios are insanely high, speculation is rampant, and tariffs helped cause the Great Depression.

I don’t want to lose 50% of my portfolio and be bag-holding for a decade. But at the same time, markets can stay irrational for a while, so going all cash isn’t the answer either.

Spending a few percent of my portfolio on these puts seems like cheap insurance in case the worst happens.

@Zed
I don’t get why people obsess over PE ratios.

The companies driving this market deserve a high PE because they are compounding future growth at insane rates. The rules of the game have changed.

@Zed
Maybe consider a momentum-based strategy. You could stay mostly invested while momentum is strong, then reduce risk when it breaks down.

Trying to time MSTR’s collapse is high risk/high reward.

I personally don’t see a 2024 recession as likely. PE ratios are high because companies are actually growing. Even if tech slows, other sectors like healthcare, software, and financials could keep pushing earnings higher.

@Larkin
Agreed. The most speculative parts of the market will always take the worst hit in a downturn. Hedging against them makes sense.

I agree with your thesis, but MSTR’s long-term bonds could keep it afloat for a while. Bitcoin has never been in a prolonged bear market, and their debt maturities are spread out over years. If Bitcoin stays up, MSTR might survive longer than you think.

@Oli
Maybe, but they don’t actually make money—so in a downturn, it’s not about survival, it’s about stock price destruction.

MSTR survived the dot-com bubble, but it got absolutely wrecked. Shorts made a killing.

@Zed
Half of MSTR’s value is Bitcoin holdings, so even if BTC drops 50%, the stock might not go completely to zero. A 75% drop seems more realistic.

Bex said:
@Zed
Half of MSTR’s value is Bitcoin holdings, so even if BTC drops 50%, the stock might not go completely to zero. A 75% drop seems more realistic.

Bitcoin fell 64% in 2022, and that downturn wasn’t even close to 2008 or 2001.

In a true recession, BTC would be obliterated—no matter what crypto influencers tell you.

@Zed
Are you predicting Bitcoin’s collapse or just hedging here?

MSTR has some fundamental backing (Bitcoin), so there’s a limit to how low it can go. Whether that’s 20%, 60%, or 90%, that’s the real question.

This could pay off huge someday, but timing with options is even harder than timing the market.

So you’re betting on a recession and Bitcoin tanking?

If you’re wrong, this could be a total waste of money. Governments and institutions keep accumulating Bitcoin. It’ll have pullbacks, sure, but I don’t think BTC ever goes below $90K again.

This is a terrible play in my opinion. But go for it.

What percentage of your portfolio are you putting into this hedge?

Daisy said:
What percentage of your portfolio are you putting into this hedge?

Probably 2-3%.