Here's something interesting.
I was trying to steel man my argument in favor of $STRK, and my belief that there will be near zero incentive to convert and I came across an interesting argument. $STRK doesn't have an options market. So if you could imagine a future where $MSTR is $10k per share, and $STRK is $1k + a small kicker for the 0.8% yield and liquidation preference, someone sitting on a large position of $STRK that's basically yielding nothing could convert to $MSTR and sell covered calls against the position for a much higher effective yield.
So that begs the question: can you launch an options market on top of a preferred stock. Answer according to Grok: yes, but it's so far been very rarely done.
So if they don't do it, I do think you'll have a conversion bleed over time of people willing to give up the liquidation preference (which won't be worth much if @Strategy is the largest company on earth anyway), in favor of the higher yield that selling covered calls can offer. And by that point I think @Strategy would love for people to convert, so maybe they're incentivized to not launch the options market. Something to think about!
@nevent1qqs...
I was trying to steel man my argument in favor of $STRK, and my belief that there will be near zero incentive to convert and I came across an interesting argument. $STRK doesn't have an options market. So if you could imagine a future where $MSTR is $10k per share, and $STRK is $1k + a small kicker for the 0.8% yield and liquidation preference, someone sitting on a large position of $STRK that's basically yielding nothing could convert to $MSTR and sell covered calls against the position for a much higher effective yield.
So that begs the question: can you launch an options market on top of a preferred stock. Answer according to Grok: yes, but it's so far been very rarely done.
So if they don't do it, I do think you'll have a conversion bleed over time of people willing to give up the liquidation preference (which won't be worth much if @Strategy is the largest company on earth anyway), in favor of the higher yield that selling covered calls can offer. And by that point I think @Strategy would love for people to convert, so maybe they're incentivized to not launch the options market. Something to think about!
@nevent1qqs...