Amgen (AMGN): When The Bitcoin Loop Meets Long Gamma
Why MicroStrategy's leveraged bitcoin loop is a roulette table, why dealers keep the tape calm, and where a bearish Amgen strangle stands.
Bitcoin Fund, Software Sidegig
I write about Michael Saylor only because enough readers asked. MicroStrategy has turned itself into a bitcoin fund carrying a loss-making software business on the side, and the mechanism fits on a napkin. Bitcoin climbs, the stock climbs with it, the company issues fresh shares or convertible notes into that strength, and the proceeds go straight into more bitcoin. Then the loop runs again. Genius or lunacy depends on where you sit; what is certain is that it works for exactly as long as the price keeps rising.
The fine print bothers me more than the loop. Every issuance dilutes existing holders. Most of the coins sit inside a subsidiary, MacroStrategy, which keeps them beyond the reach of shareholder claims if the parent goes bankrupt. So a bitcoin crash does double damage: the stock craters, and holders discover their claim on the underlying asset was a mirage. The accounting adds a twist. Bitcoin counts as an intangible asset, so declines get written down while gains stay invisible until a sale that may never come. Liquidity comes from capital raises, since the software side produces none. A house of cards dependent on an endless bull run.
Prophets Into Clowns
Saylor has run this play before. In the dot-com years, after some accounting acrobatics, MicroStrategy shares lost 99.9 per cent of their value. He dodged bankruptcy by a hair, and a hair beats nothing. Humility did not make it into the lesson plan. The digital energy talk is the same personality with a new asset, and this time nothing hedges the position. Who writes insurance on that without risking their own solvency when the event arrives? Retail, and the less careful institutions. History enjoys turning prophets into clowns, with a short list of exceptions who get called saints.
So I stay away. It is a headless chicken game, and anyone who prefers it to roulette is welcome to their evening. My preference is compounding over time, with returns that still look good after the risk is counted. Duller sentence, richer life.
Dealers Holding The Lid Down
The wider tape explains why none of this has blown up yet. Trump's incoming tariffs on Mexico, Canada and China barely moved markets, because investors read them as opening bids rather than settled policy. Vietnam's absence from the list caught my eye, given how much Chinese product reaches America by that route; it looks like alliance building in Asia to counterweight Beijing. Meanwhile the American consumer keeps carrying growth on wealth from stocks, property, gold and crypto, and a firm dollar stretches that spending further.
Valuations sit near territory last visited in the late nineties, yet bad headlines slide off the indices. Part of the reason is mechanical. An unusually large crowd is selling options, which leaves dealers long gamma. Hedging that book means buying stock as prices fall and selling as they rise, which flattens every swing and absorbs shocks for now. For anyone holding options, that is the environment: realised movement smaller than the headlines suggest, collected premium decaying comfortably, and a calm that can reverse the moment the option sellers step back.
Repair Or Let It Go
That backdrop is exactly why my slightly bearish Amgen strangle is off the mark on paper. A trade built around movement, in a market that declines to move, sits underwater, and mine does. Whether to repair the position or let it go is the question I am working through, and the answer hangs on whether the dealer cushion holds. The specifics stay in the letter on Substack.
What has my attention: the next round of tariff language and whether markets keep treating it as theatre; the consumer holding up; the option-selling crowd thinning; and the bitcoin price, because the loop in the first section is the loudest tripwire in the room. When the music stops there, the calm everywhere else will sound very different.
- AMGN
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