Strategy Variable Rate Perpetual Stretch (Derivatives) (STRC)

This is strange.

$STRC and $SATA have the same effective yield despite the latter being further along the risk curve.

This tells me that the market is in a state of fear and irrationality.

Sentiment for Bitcoin is completely dead and we are seeing that reflected here. https://t.co/feaWjbM7dk

I'm hearing folks say "Why buy $STRC when $BTC is going to rip more."

Let's analyze the upside scenario where $STRC outperforms.

Assumptions:
1. STRC at $86
2. STRC dividend $12/yr (no changes, up or down)
3. BTC at $62k

At a $12 dividend and $86 STRC price, that's a 13.95% yield. Now, let's assume you believe STRC will return to par at some point.

At $86, a return to par equates to a 16.28% gain. Total return for holding for a year is 30.23%. With BTC at $62k, that means for an equivalent return in BTC, BTC would need to be a $80,744. However, STRC is unlikely to be as volatile as BTC as we've seen this week, and especially as the attention settles down. So, let's say STRC will have an average 0.5 Beta to BTC over the period.

So, on a risk adjusted basis, you'd actually need BTC to get to $99,488 (2x the 30% gain) in a year to have an equivalent risk-adjusted return.

Now, let's shorten the time frame. Let's say you think STRC will return to par in 3 months. For a raw equivalent BTC gain, you'd need BTC to be at $74,256. For a risk-adjusted equivalent BTC gain, you'd need BTC to be at $86,512.

So, which is more likely, BTC at $86,512 in 3 months or STRC back at par? If there's any further downside from here on BTC, STRC likely falls less and will very very very likely still keep earning the dividend (remember, they have cash for 17 months of dividends).

So, unless you think BTC is about to RIPPP from here in the next 3 months, $STRC is a pretty solid upside-capture bet, especially with @saylor and the team still in the kitchen, cooking.